Population trends signal changes in economies and markets

Demographics are the hidden factor in long-term trends affecting capital markets and the economy. And they are highly predictable: today's 40-year-olds are next year's 41-year-olds, barring war, disease or other man-made or natural catastrophes.

Younger populations drive stronger GDP growth

The biggest jump in contributions to GDP growth occurs when non-working adolescents enter the workforce; another jump, often smaller, occurs as workers reach their 30s and peaks in their 40s. By the time workers hit their 50s, their contribution to GDP growth slips. Thus, we expect countries dominated by young adults, and where the young-adult population is growing quickly, to have the strongest per capita GDP growth. And those with aging populations to experience slower economic growth. See Graphic

But middle-aged adults influence capital markets

With regard to savings, however, young adults rarely are savers—rather they are net borrowers. Middle-aged adults drive capital market returns in terms of income, savings, and investments. Generally, they focus on stocks first and then bonds. As they retire, they tend to first sell off their equity holdings and then their bonds to finance their consumption needs. Thus, awareness of demographic trends around the world informs our view of how economies and capital markets will fare in future decades.

Downloadable graphs reveal demographic trends

In these graphs, Research Affiliates displays how demographics will play out in different countries and regions. The graphs cover 26 individual countries and hundreds of comparisons between them. Graphs are downloadable, and are based on data from the United Nations, Department of Economic and Social Affairs Population Division.

These graphs will be useful to researchers seeking to better understand demographic trends around the world, and those seeking to apply this information to economics and financial markets.

You can view graphs in three ways:
1) You can view a graph for an individual country. For example, to get the graph for Canada, click on the square where Canada on the y axis intersects Canada on the x axis.
2) You can view any pair of country graphs by clicking on the square where those countries intersect on the matrix.
3) You can view graphs for any individual country by clicking on its name.

The following resources provide a deeper look into issues affecting Demographics and Markets.