Developed countries are graying rapidly
Demographics only make the outlook worse, as populations in Japan, the United States, and Europe gray and the ratio of active workers to retirees shrinks. In the United States, there were five working adults for every retiree in 1970. Today, that ratio is 3.5 to 1 and, if the retirement age remains constant, that ratio is projected to drop below 2 to 1 by 2050, based on data from the U.S. Census and the United Nations.
Aging populations will slow growth
These demographic shifts will have substantial effects on the economy—a combination of increased inflation and interest rates, a rising trade deficit, slower GDP growth, delayed retirement, and increased immigration. The developed world may go from a period of high unemployment to a shortage of workers.
Emerging markets poised to benefit
Not only will aging populations cause GDP growth to slow, but retirees will sell off their assets—first stocks, then bonds—to finance their lifestyles. In contrast, much younger and relatively debt-free emerging markets stand to benefit from these changes.