Global
13 May 2011
The Wide Angle
The End of Population Growth
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Periodical
Research Team
Sanjeev Sanyal
Global Strategist(+65) 6423 5969sanjeev.sanyal@db.com
M a c r o
G l o b a l M a r k e t s R e s e a r c h
G l o b a l S t r a t e g y
Summary
Latest census data from around the world suggests that human populationwill peak at around 9bn in the 2050s, almost half a century sooner thangenerally anticipated. In our view, global fertility will fall to the replacementrate within fifteen years. Population may keep growing for a few moredecades because of momentum from the age structure and rising longevitybut, reproductively speaking, our species should no longer be expanding. Thiswould be a major turning point in the history of the human race.
Birth rates have been low in developed countries for some time but they arenow plunging in developing countries. The Chinese, Russians and Braziliansare no longer replacing themselves while the Indians are having fewerchildren. Moreover, the skewed gender ratio in giants China and India implythat their reproductive capacity is significantly lower than headline fertilitynumbers suggest.
For most major economies, the workforce will be either stable or falling overthe next three decades. East Asian countries like China, Japan and SouthKorea will suffer sharp declines. In contrast, India will enjoy workforce growthinto the 2040s. This will have important implications for the economicgeography of the 21
st
century.
Aging societies will respond by extending working lives. Many readers of thisreport will be both healthy and working at the age of seventy.
13 May 2011 The Wide AnglePage 2 Deutsche Bank AG/Hong Kong
Background
This is the first of a newly initiated publication series called The Wide Angle. The series plansto focus on global mega-trends that are shaping the world around us. In this inaugural piece,we look at the population dynamics of the 21
st
century. Future articles will further explore thistheme as well as others such as global consumption patterns, macro-imbalances, economicgeography and so on.Demographics and population dynamics have come back in fashion in recent years ascompanies and policy makers have begun to worry about the consequences of rapidly agingsocieties. However, till now, much of the discussion was based on data collected a decadeago. Most countries in the world collect population data through a general census at thebeginning of each decade. The latest census was conducted in 2010 or early 2011 and, inrecent weeks, major countries like China, India and the United States have published all orsome of the data. Although the evolution of population dynamics is largely along expectedlines, the pace of change has been surprisingly quick. This has important implications for howwe think of the future of individual countries as well as of the human race as a whole.The conventional view as expressed by the UN Population Division latest forecasts (publishedon 3rd May 2011), is that world population will hit 7 billion this year, 9.3bn in 2050 and will beover 10 billion by the end of this century
1
. It also forecasts that India will surpass China asthe world’s most populous country before 2025 and will peak at 1.72bn in 2060. In our view,however, world population will stabilize decades before 2100 and at a much lower level.Take for instance the population count for China. The official census shows that the country’spopulation stood at 1.34 billion in 2010 which is some 15-20 million lower than mostdemographers, including the UN, were earlier expecting
2
. Birth rates have been low indeveloped countries for some time but they are declining very rapidly across emerging world,especially when adjusted for the gender imbalance in some countries. As we shall discuss,even India may soon have an effective fertility rate that is close to replacement level. It lookslike the human species, reproductively speaking, will stabilize by early in the next decade.Overall population will continue to grow for some time because of momentum but this willincreasingly be driven by the fact that we are living longer. Thus, future population growthwould not be derived from reproduction and fertility but from health and longevity.Eventually, the gains from longevity will peter out (even allowing for medical advances), andthe fall in fertility would triumph
3
.Of course, there are many other changes in global demographics other than just populationgrowth. Urbanization and migration (both internal and international) is rapidly changing wherewe live and work. China has witnessed an extraordinary pace of urbanization in the last twodecades and the latest data shows that the urban-rural split was even in 2010. This is alsotrue for the overall distribution of the world. Now we are witnessing the same phenomenonplay itself in India and it is likely to be an urban majority country within a generation.Meanwhile, the United States too has witnessed a great deal of internal churn. Between2000 and 2010, the South and West saw a population of increases of 14.3% and 13.8%respectively while the Midwest and the Northeast saw increase of merely 3.9% and 3.2%respectively. Michigan actually saw a population loss of 0.6% over the decade.The sheer scale and pace of all these changes, in our view, will be an important if notdominant factor in the economic history of the 21st century. Urbanization, for instance, willradically change the economic, socio-political and ecological landscape of countries like Indiaas cities try to absorb hundreds of millions of new inhabitants. Meanwhile, we expect China
1
“World Population Prospects”, UN’s Population Division, 2010 revision (published 3rd May 2011)
2
“World Population Prospects”, UN’s Population Division, 2008 revision compared with the latest numbers.
3
It is possible that medical advances will allow people to live routinely into the 100s but it is just as possible that aglobal epidemic causes a spike in death rates. We have ignored such “random shocks” in the discussion.
13 May 2011 The Wide AngleDeutsche Bank AG/Hong Kong Page 3
will grapple with how to redeploy an older but better educated workforce. We expectpensions, healthcare and immigration will dominate policy debate in the West. These arealready important issues but could now become an overwhelming concern.
A Brief History of Population Growth
Population grow is not a new thing and human numbers have been increasing since thespecies emerged in Africa around 200,000 years ago. However, the sustained populationboom of the last two centuries is on a different scale from anything experienced before. Inorder to appreciate this, let us consider how demographics have evolved over the last twomillennia. According to Angus Maddison
4
, total world population stood at 231 mn in 0 ADwith India accounting for 75 million and China for 57 million. At this stage, the most populousEuropean country was Italy, at the heart of the Roman Empire, with 7 million. Germany had 3mn, France 5mn and the United Kingdom had a mere 0.8mn (all data using present dayborders).Over the next thousand years, world population grew only marginally to 268 mn but by 1500AD, despite wars and plagues, population had risen to 438mn. India’s population at this stagestood at 110 mn and China at 103mn. From here, growth rates accelerated in Europe and inChina. By 1820, even as the Industrial Revolution had taking off in Britain, the overall globalpopulation stood at 1bn with China alone accounting for 381mn. India’s population had alsogrown but beset by internal wars and political uncertainty, it was now a distant second at 209million. Note that at this stage, Britain’s population of 21mn was more than double that of theUnited States.
World Population 0-2010 AD
in millions 0100015001820 19502010
Germany 33.51224.9 68.382.3Italy 7510.520.2 47.160.5UK 0.823.921.2 50.462US 0.71.3210 152.3309Japan 37.515.431 83.5126.5China 59.659103381 546.81340India 7575110209 3591223World 2312684381041 25246910
Source: The World Economy: A Millennial Perspective, Angus Maddison, OECD 2001; UN Population Division; various national census data
It was during the nineteenth century that population growth rates shifted up by an order ofmagnitude. Improvements in medicine, public health and in productive technology allowedmankind to dramatically lower death rates. China and India saw accelerated populationgrowth but it was Europe that experienced the biggest gains. Despite losses from two worldwars, Germany’s population jumped from 25mn in 1820 to 68mn in 1950 while the UnitedKingdom saw its population rise from 21mn to 50mn. Note that these numbers understatethe European population boom because large numbers emigrated to the Americas and tovarious colonies. The United States saw its population jump from 10mn in 1820 to 150mn in1950! Similarly, Latin America saw its number rise from 21mn to 165mn.Population growth accelerated further in the second half of the twentieth century. However,the source shifted from the developed West to the relatively underdeveloped East. We tendto think of Japan as a country of aging and declining demographics but for the twentiethcentury as a whole, it was a star performer. Its population rose from 45mn in 1900 to 84mn
4
The World Economy: A Millennial Perspective”, Angus Maddison, OECD 2001
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