Changing demographics and urbanization

Imagine a world with far more grandparents than grandchildren. A world where the majority of the population lives in sprawling megacities dotted around the globe. That’s the world we’re hurtling towards, marking a drastic change for society.

Longevity

Thanks to medical progress and higher awareness of healthy living, people are now living longer. However, most regions in the world are also experiencing a marked decline in the number of children being born. This has profound implications: not only will the population size fall dramatically over time, our current systems are also not used to have more people retired than working. It will likely strain public finances, as age-related spending will rise, while income from taxes will shrink.

Nowhere is this more palpable than Japan, where the median age is currently 48 years old. Empty homes (known as akiya) in provincial areas are at times given away for free – this is partly due to younger people flocking towards cities, where a large portion of jobs are found. But mostly, it’s because Japan’s population saw rapid growth last century, but is now falling fast. The country currently has around 126 million inhabitants, but this is estimated to fall by nearly 16% over the next three decades.¹

As society ages, our habits change – and this has repercussions for the services we consume. Many major governments are now watching Japan to see whether there are any lessons to be learned, which could be applied in their country. However, although the issue of an ageing society is a global one, it needs highlighting that the pace of change is not homogenous across countries. While Japan topped the board in 2020, with 28% of its population aged 65 and over, the United Arab Emirates found itself at the bottom of that list, with only one percent of its population representing that same age category.²

There are opportunities here for businesses providing labour-replacing technology or those catering to the growing needs of the world’s ageing population.

Urbanization

Seventy years ago, more than two thirds of the world’s population lived in rural settlements. Today, more people live in urban areas than rural areas, and it’s a trend that is continuing apace. Soon, there will be megacities with more than 10 million inhabitants clustered all around the globe.

More than 80% of global GDP is generated in cities¹, and so, this trend could be beneficial for the economy. However, it also brings challenges – governments have to provide sufficient infrastructure and enough homes to house people. They will also need to think about how megacities could impact their efforts in fighting climate change.