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The global population is forecast to reach the eight billion mark by 2025, mainly driven by growth in the Middle East and Africa, and South Asia. A population of eight billion will create significant benefits and opportunities, as it broadens the global labour force and consumer markets. However, an expanding population will weigh on global natural resources and the environment, put upward pressures on commodity prices, while exacerbating poverty problems in some parts of the world.

Key Points 

  • The global population is forecast to increase by 17.0% between 2014 and 2025 to reach 8.0 billion by the end of the period. The Middle East and Africa will record the fastest growth in population, by 27.0% during the same period. Meanwhile, Eastern Europe will be the only region where the population is shrinking;
  • An expanding human race will lead to larger consumer markets, thus driving the demand for both necessities and discretionary goods. The world’s total consumer expenditure is forecast to reach US$62.6 trillion by 2025, up by 44.0% in real US$ terms over 2013;
  • A young and growing population can be a boon to economic growth as it increases the workforce and drives output growth. Turkey and Brazil, for instance, are benefiting from a demographic dividend, with annual real GDP growth averaging 3.3% and 3.1% per annum between 2008 and 2013 respectively;
  • Scarcity of resources and environmental issues are, however, the key challenges of a growing global population. Due to soaring fossil fuel energy consumption, the world’s total carbon dioxide emissions increased by 41.8% during the 2000-2013 period;
  • Emerging and developing countries will face growing pressures to provide enough food, energy and urban facilities as well as jobs for their growing population. By 2025, 57.9% of the global population will live in urban areas. On the other hand, rapid population ageing, coupled with declining birth rates, will continue to be major challenges for some economies, especially those in the developed world.

Population Growth Patterns Vary Across Regions 

  • The global population reached the seven billion milestone in 2012 and stood at 7.1 billion people as of 2013. Between 2014 and 2025, it is forecast to expand by 1.0% on average per year to reach 8.0 billion by the end of the period;
  • The Middle East and Africa will drive the global population growth, as its population is estimated to increase the fastest, by 27.0% or 368 million in absolute terms during the 2014-2025 period. The region has the highest fertility rate in the world, with 4.6 children being born per female on average as of 2013. Another region which will also see a rapid increase in population will be Australasia, primarily due to growing immigration influx;
  • Asia Pacific will however remain the most populous region, with India witnessing the most rapid population expansion by 178 million between 2014 and 2025 to reach more than 1.4 billion by the end of the period. India will outstrip China to become the world’s most populous country by 2023;
  • Due to extremely low fertility rates and emigration, Eastern Europe will be the only region which sees its population shrinking by 1.5% during the 2014-2025 period. In 2013, Eastern Europe’s fertility rate stood at 1.6 children born per female, compared to the global average of 2.9;

Global Population by Region: 2008-2030

Source: Euromonitor International from UN/ national statistics.

Note: Data from 2014 onwards are forecasts.

  • Global population growth will be influenced by increasing life expectancy as a result of better healthcare, nutrition and rising living standards. The global population is getting older, with the median age rising to 32.8 years old by 2025, up from 29.9 in 2013.

Opportunities are Significant 

An 8.0 billion global population will provide significant opportunities for countries and businesses:

  • Growth in global population will directly result in an expansion of the global consumer markets. The world’s total consumer expenditure amounted to US$42.3 trillion in 2013, while it is forecast to increase by 44.0% in real US$ terms between 2014 and 2025 to reach US$62.6 trillion by the end of the period;
  • Population growth, especially in developing countries, has been accompanied by rapid urbanisation. In Asia Pacific, for example, the urban population rose from 1.5 billion in 2008 to 1.8 billion in 2013. Urban consumers often have higher spending power thanks to better access to employment, education and healthcare;
  • China and India will continue to be the world’s largest markets, with their combined populations accounting for 35.2% of the world total population by 2025 (slightly down from 36.5% in 2013). As population grows and income rises, both countries will see their middle class expanding rapidly, thus creating huge opportunities for marketers of middle-class goods and services including big-ticket items. The number of households with average annual disposable income over US$10,000 (in constant terms) in China almost doubled during the 2008-2013 period to reach 191 million by the end of the period;
  • Agriculture exporting countries and businesses in the agriculture sector will find growing opportunities due to a soaring demand for food as a result of population expansion. Agriculture, hunting, forestry and fishing made up 16.7% and 21.9% of total gross value added in India and Vietnam in 2013 respectively;
  • Growing population will also lead to a larger pool of workforce, thus supporting global economic growth. In countries such as India, Brazil and Turkey, an expanding and youthful population has been bringing significant demographic dividend and adding dynamism to the economies. However, growth in the total working age population (aged from 15 to 64) worldwide already slowed to an average annual rate of 1.4% per year between 2008 and 2013, compared to 1.7% seen during the 2000-2007 period.

But Challenges are Also Numerous

A rise in the global population also represents many challenges:

  • Population growth will put a further strain on limited natural resources including land, fresh water and energy. Soaring population has exacerbated water scarcity problem in the Middle East and Africa, the region with the fastest growing population rates in the world. Many countries will face growing pressure to provide enough energy and food for their growing populations. In India, for example, primary energy consumption increased by 30.3% between 2008 and 2013. As energy prices rise, business input costs will be higher and discretionary consumer spending potential will be affected;
  • Population growth will also weigh on the global environment as increasing production and energy consumption leads to higher carbon dioxide (CO2) emissions. In 2013, the world’s total CO2 emissions reached 34.1 billion tonnes, up by 13.0% since 2008;
  • Population expansion does not mean that all new consumers are wealthy, and it may even aggravate poverty problems in some parts of the world including Africa and South Asia. In Nigeria, 78.5% of the population still lived below the international poverty line of US$2.0 per day as of 2011;
  • Creating enough jobs for a burgeoning youth population is also a key challenge in some developing countries such as Kenya and South Africa where the unemployment rate was high at 36.6% and 24.7% of the economically active population in 2013 respectively;
  • On the other hand, rapid population ageing is narrowing the labour pool and putting an increasing burden on government budgets in industrialised nations. Countries with the highest old-age dependency ratios (% of persons older than 65 per persons aged 15-64) in the world include Japan (40.4%), Italy (32.1%) and Germany (31.4%) in 2013. Globally, the old-age dependency ratio rose from 12.0% in 2008 to 12.7% in 2013 and should reach 20.0% by 2020;

Old-Age Dependency Ratio in the World and Selected Countries: 2008-2030

Source: Euromonitor International from national statistics/UN.

Note: Data from 2014 onwards are forecasts.

  • Rapid urbanisation and population growth will create growing challenges for urban planning, especially in emerging and developing countries. In many megacities (metropolitan areas with populations in excess of 10.0 million people) across the globe, infrastructure supplies including housing, water and sanitation facilities have not kept up with population growth. About 11.0 million Brazilians still lived in slums in 2010, while the figure in India was 65.0 million people as of 2013, according to national statistics.

Prospects

  • Although the global population is increasing, birth and fertility rates are declining worldwide, driven by factors such as increasing living standards and changes in lifestyles. The global fertility rate is forecast to drop to 2.6 children born per female by 2030, down from 2.9 in 2013. This will hold back the pace of global population growth in the coming years. Governments in countries with extremely low birth rates such as Russia and Germany have introduced pro-natal policies to encourage people to have babies;
  • Demographic changes including population ageing, declining birth rates and rising urban inhabitants will continue to shape the global consumer markets. There is a growing trend towards single-person and family without children households, while the number of families with children is declining. By 2030, 19.4% of the global households will be single-person households, up from 16.8% in 2013;
  • Population expansion will continue creating upward pressures on food and other commodities prices. Ensuring food and energy security will remain a key challenge for developing and emerging economies. There will be greater consumer demand for energy-efficient lighting, transportation and housing, while countries will continue boosting renewable energy.

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