An Ageing World Results in Benefits and Hurdles for the Global Economy
There will be 775 million people aged over 65 in 2020, accounting for 8.2% of the world population. It is clear that this segment is not to be overlooked either by the impact of the trend in economic terms or in terms of their impact on consumer markets. Not least because as discovered in our Annual Survey 2011 this segment tend to spend their money rather than save, and what is more they are inclined to spend it on themselves.
Ageing is predominantly a rich world issue, but in the future will impact on emerging markets too. This is a challenge for those countries that are ageing before they become rich:
Four of the world’s five oldest countries are in the Eurozone. In 2012, Germany, Italy, Greece and Austria had the highest median age globally, ranking behind only Japan. This ageing trend does nothing to help the economic slowdown in the region where austerity measures, which include tightening of the public purse strings, are already burdening consumers.
Meanwhile four of the five fastest-ageing countries, measured by looking at the increase in median age in years between 2013 and 2020, are in the Middle East: United Arab Emirates, Oman, Bahrain, Maldives and Iran will see their median ages increase fastest in the world during this period – although from a low base – due to a combination of falling fertility rates, increasing life expectancy and migration patterns.
Seven emerging markets, with an average per capita disposable income of less than US$10,000 already had a median age over 40 in 2012; and three economies with a median age above 40 had an income below US$5,000.
The fiscal impact of ageing has been estimated to be larger than the fiscal impact of the financial crisis and coming on top of the financial crisis the burden is set to be particularly problematic in already heavily indebted countries. Only three of the ten oldest countries in the world (measured by median age) had a budget surplus in 2012 – Germany, Hong Kong, China and Switzerland.
In terms of consumption this age segment is the fastest-growing yet is still underserved. Ageing populations have an impact on obvious sectors such as health goods and services but they are also interested in technology, travel and other experiences and many goods and services that are typically identified with the young. Nintendo have recognised this with the Wii being marketed as fun for everyone regardless of age, sex or ethnicity.
My colleagues, An Hodgson and Carrie Lennard will be discussing issues like these and many more in their forthcoming webinar: Harnessing the Power of the Older Consumer.