There are too many of us living on this planet, so we are inevitably heading toward the apocalypse. We’ve heard it all before, but a recent Ipsos report tells a different story : the growth rate of the world’s population is not out of control. Today there are 7.8 billion of us, and we’ll number 8.5 billion in a few decades, but then the demographic decline will set in.
It’s surprising, but not entirely so considering that the drivers of this decline are already set in motion, and we can see them in various aspects of everyday life. Naturally the pandemic, which has also played a part, could accelerate the downward direction of the world’s population. But it was already dropping in 20 countries before the pandemic, and the projections indicate that Covid-19 will lead to a demographic decline in 30 or more countries by 2050, if not sooner.
The question doesn’t only impact developed parts of the world such as Western European countries or some Asian nations. Developing economies are affected too – this may actually be the biggest surprise. And the implications in terms of public policy and market strategy are huge.
The Ipsos report focuses on the 10 most populous countries based on pre-pandemic numbers: topping the list is China, followed (in order) by India, the US, Indonesia, Pakistan, Brazil, Nigeria, Bangladesh, Russia and Japan. According to projections extending out to 2100, China will lose around 600 million people, and India nearly 300 million, the equivalent of three times the current US population. These losses will be only partially compensated by significant growth in most African countries (among the top ten are the DR Congo, Ethiopia, Tanzania and Egypt).
What are the drivers of this decline? There are essentially three: urbanization, fertility and an aging population.
In 1960, one-third of the people of the world were city dwellers, while today that number is 60%. This translates into smaller families, greater empowerment for women (who become mothers when they’re older and have fewer children), and in general an aging population. In fact, we can already see that current rate of population growth is not caused by people having more children, but by people living longer. (For example, in China a century ago, life expectancy was 36, in India 32 and in Nigeria 26). In the ten most populous nations, the birth rate is lower than the natural population replacement rate (2.1). The only exception is Nigeria, but even here the birth rate is still lower than in 1960 in this country.
What’s more, the Brookings Institute estimates that in the US, for example, 300,000 fewer babies will be born due to Covid-19. And last year China saw a 15% decrease in the birth rate. So speaking to the argument that the lockdown (combined with more limited access to birth control in developing countries) will lead to a baby boom, it is still nothing more than a hypothesis, as of yet not supported by the data.
In light of the report’s findings, we need to seriously consider the policy and market implications. More than ever before, “Perennials” must be the focus of product and service design and provision. Big spenders for the most part won’t be young people, as per the long-standing belief. What’s more, fewer members of the so-called “Generation Anxious” will buy their own homes; they’ll rent instead. They prefer paying for access to products and services rather than owning them. And if they have fewer children too, the market will see a transformation of supply and demand.