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In determining economic growth, few factors are more influential than demographics. And one demographic trend in particular — the aging of our global population — is already presenting us with unprecedented challenges.

For most of human history, average life expectancy worldwide ranged between 25 and 35 years. As a result of medical advances and improvements in health and nutrition, a person today can expect to live to be 70. By 2100, average life expectancy is projected to be over 80.

Changing demography is creating both opportunities and crises for policy makers, the business community and society at large. Trends in the size and composition of our population are not only shaping economic growth rates and inflation expectations but the makeup of the economy as well.

The challenges of a changing population can be met if policymakers are open to new, innovative ideas and are not afraid to experiment. This will be especially important in the areas of employment, immigration, capital markets and trade.

Key Takeaways

  • Rapid aging in many developed economies is leading to an unprecedented phenomenon: falling population. Research indicates that countries with older populations tend to grow at much slower rates than those with younger populations.
  • Rising longevity and declining fertility trends will likely result in the need for today’s working population to significantly ramp up retirement savings. Healthcare demand and expenditures will grow steadily, and housing must adapt to meet the needs of aging citizens.
  • While demographic trends are applying pressure on the already strained finances of retirees and governments, they also create significant investment opportunities in areas such as healthcare, infrastructure and technology. Businesses and economies that are focused on innovation are expected to emerge as tomorrow’s leaders.
  • In planning for the future, the focus should be on investing in human development and building resources. Even modest adjustments to legislative and fiscal policies can produce large, positive and lasting impacts.