9,000 people are born every hour, but what does it mean?

By Jon Benjamin

Sometimes it’s useful to lift our eyes from the immediate turmoil to the far horizon. It’s trite but true to say that all of the global problems and opportunities that the Eurasia Group looks at are directly linked to the overall number of people there are in the world, the conflicts they fuel, their competing world views, and the market opportunities they create (or destroy). A brief look at some long-term global demographic projections might be informative, particularly because this important subject is rarely discussed.

The world population continues to grow — alarmingly so, despite falling fertility rates in most of the world. The world’s net increase in population amounts to about 9,000 people per hour, or 220,000 people per day. That means the equivalent of a new San Francisco every 4 days, a new Qatar every week, a new Libya every month, and something like a new Egypt or Germany every year. Just since 2000, the global population has increased by more than 10 percent, or nearly 800 million people, an increase that is larger than the current combined total population of the United States, Indonesia, and Brazil (the world’s most populous countries after China and India).

Where does this growth end? According to median UN predictions, the global population will reach 7 billion in 2012, 8 billion in 2025, and 9 billion in 2040. It will then stabilize at about 9.2 billion in 2050. So, although the global population growth rate actually peaked as far back as 1963, the number of people in the world is still going to grow by more than a quarter at least before leveling out. It’s possible that the final stable population figure will be even higher, perhaps upwards of 10 billion.

Of course, all this growth will be far from uniform. Growth rates will be lowest in those countries that most need babies, and highest in already overpopulated areas where the dangers of hunger and poverty are highest. Populations will be increasingly crowded into dense urban areas and fragile coastal plains. Around 2025, India will overtake China to become the world’s most populous country. By 2050, those two will still be by far the largest countries. And by then, nearly 8 billion out of the 9 billion-plus population will live in what we currently consider to be developing countries or emerging markets, while the population of today’s developed industrialized countries will be about the same as it is now (1.2 to 1.4 billion). Even there the trend isn’t even: If current immigration patterns continue, the United States will continue to edge up, perhaps one day reaching 400 million, though never more than 5 percent of the world’s population. Elsewhere, there will be some alarming declines.

The populations of Russia and Japan might shrink by up to 25 percent. Germany, Italy, Spain, and Poland will also significantly decline, while the UK and France will scarcely increase. If Turkey ever joins the EU (and its population might be the biggest reason it never does), it will be by far its largest member, on course for a population of 100 million. Meanwhile, some of the worst declines are in sub-Saharan Africa, particularly because of HIV/AIDS, which now gets few headlines. Average life expectancy in Zimbabwe, Zambia, Malawi, and Swaziland is now about what it was in medieval Europe. And yet, population declines aren’t always disastrous as they can mean fewer people sharing the same overall prosperity. But they can also generally mean shrinking markets and a smaller tax-paying, productive workforce in relation to the number of children and pensioners needing support.

Shrinking workforces necessitate a fresh political look at the always sensitive subject of immigration, and not just in the United States and Europe. How can Russia, for example, fully benefit from its copious natural resources while the population of Siberia and its own Far East continues to shrink alarmingly? Will it eventually have to allow mass immigration from the much more populous neighboring Chinese provinces with the ethnic tension and revived territorial claims that might one day provoke?  

Overall, are these global population projections cause for alarm? After all, haven’t we been coping reasonably well, achieving rising levels of prosperity in much of the world despite a global population increasing by another billion roughly every 13 years since 1960? Previous demographic doomsayers have mostly been wrong, from Thomas Malthus onwards (he thought the world was already disastrously overpopulated in 1800 when global population wasn’t even 1 billion).

It comes down to economic growth. Billions of new people mean potentially huge new consumer markets. But if the economics doesn’t provide the necessary growth to feed, clothe, shelter, and employ them, then much more calamity may await in the form of more failed states where international crime and terrorism fester, pervasive mass poverty excluding people from the benefits of globalization, pandemic disease and greater conflict, with fewer richer countries prepared to take a lead or offer the resources to tackle these issues. If the economics do succeed, the environmental impact of much greater industrialization and urbanization in the developing world, combined with hugely increasing energy demands and constraints on clean water supply, all add huge stresses of their own.

Understanding the politics of this — who makes the key inter-generational decisions, where, and with what consequences — is vital for anyone taking the long view. For long-term investors, the demographics help map out where the largest markets will be decades from now. Paying attention to the politics and the economic policies of ruling elites, there are major considerations in assessing the likelihood of far-sighted investments producing outsized returns.