THE ageing population is one of the most powerful demographic trends shaping our future. Due to a combination of declining fertility rates and the monumental progress achieved in medical science, the extension in human life expectancy is slowly but surely altering the demographic portrait of nearly every country in the world.
Although the onset and pace of this demographic transition may vary among countries and regions due to specific local conditions, the fact is that the total human population and the share of older people in our midst are steadily increasing. For instance, the United Nations revealed that for the first time in human history, the number of people aged 65 and over surpassed that of children under the age of 10 in 2018. In other words, we are living longer and better. It is therefore important to seize the opportunities related to the longevity dividend brought forth by the rise of the human tide, which is expected to reach 8 billion by 2023 according to the recently published World Population Prospects 2022 by the UN. This could be one of the biggest stories of the 21st century.
East and Southeast Asia not spared
Countries across East and Southeast Asia such as China, Japan and Singapore have also not been spared from the burgeoning greying population in their midst. A case in point: data compiled by various Singapore government agencies indicate that 1 in 4 people will be aged 65 and over in Singapore by 2030, up from 1 in 8 in 2015. The ratio will be 1 in 2 by 2050.
This demographic shift has profound implications for the country's healthcare system and elderly care services like assisted living and nursing homes. For instance, old age - along with health conditions such as diabetes, high levels of cholesterol and obesity - is the most common risk for Alzheimer's. For this reason, Singapore has identified population ageing as one of the key issues shaping its future. By mitigating the adverse effects associated with the demographic transformation, policymakers aim to maximise opportunities in meeting the holistic needs of its elderly adults.
India - for now, a huge, young population
As over half of India's population is still under the age of 30, the South Asian country continues to be home to a relatively large number of young people compared with other major economies like China and the United States, where median age is around 39 years. Given that the largest economy on the Indian subcontinent will soon overtake China's total population by 2023, according to the World Population Prospects 2022 by the United Nations, the promise of its massive demographic dividend indeed looks bright. Like the other countries in its neighbourhood, the number of older adults is nonetheless also poised to rise across India by 2050. Put differently, investing into its long-term social infrastructure like healthcare will eventually pay off in light of the impending demographic challenges. After all, those over the age of 65 are more likely to have a different set of health challenges and family situation than those who are in their 20s.
Investment opportunities
Nevertheless, ageing need not be all about gloom and doom. In fact, extended longevity can be a positive phenomenon rather than the conventional "demographic time bomb" narrative that has come to be widely associated with ageing. If people can enjoy longer, happier and more fulfilling lives through work, hobbies and leisure activities as well as financial planning, their lifetime economic contribution to the society can be greater than that achieved by members of past generations. As Albert Einstein once said, "I live in that solitude which is painful in youth, but delicious in the years of maturity." After all, senior citizens need a wide range of services and support to maintain their lifestyles.
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That is where longevity can become an opportunity for investors. Investing in the silver economy requires a segmental investment approach, since there is a wide range of services and support that senior citizens need to maintain their lifestyles. In view of the frailty of old age and the shifting lifestyle preferences of the greying population, sectors relating to healthcare, elderly-care services, leisure activities, consumer goods like personal hygiene products, and financial planning should remain bright.
The writer is next-generation research analyst at Julius Baer.
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