Most of MSCI EM is past peak working age population
- South Korea’s fertility rate fell to an all-time low of 0.72 last year, the lowest globally (and to just 0.55 in Seoul)
- Within forty years, the country’s working-age population could have halved from now; over half the population would be over 60, with one dependent for each South Korean of working age, according to UN projections. By the end of the century, the total population could have halved.
- South Korea’s falling birthrate is an extreme example of a trend that used to be seen as an issue for developed markets but is increasingly becoming one for emerging markets as well.
- 58% of the MSCI Emerging Markets Index by weight has already passed peak working-age population; by 2050, this is expected to reach 87%, with 58% of the index having seen a 20% fall in the working-age population.
- India’s working-age population growth will more than offset China’s decline until 2033; from then on, demand for labour from current Frontier and beyond Frontier countries is likely to pick up.
- Demographic change and the response, including AI/automation, offshoring, immigration and government spending and the resulting impact on growth, inflation, interest rates, debt, equality, politics and geopolitics, will be a key theme for markets over the coming decades.