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Driven by falling fertility rates and increasing life expectancy, the age profile of different populations is shifting fast.  The world already has more older people than children, and more people of extreme old age than ever before.

Economically, ageing is usually perceived as overwhelmingly negative. However, our latest Research analysis suggests a new, positive narrative focused on healthy and active ageing could create compelling potential for increased economic productivity – and also long-term opportunities for multiple market sectors.

Global populations are shrinking – and ageing

Nearly every country in the world is experiencing growth in the proportion of its population aged over 65. This is partly a result of improved life expectancy, but also lower birth rates. Today, 91 out of 195 nations have fertility rates below the replacement level of 2.11. At the same time, all age cohorts in developed countries from Baby Boomers to Generation Z can expect, on average, to live to 90 or beyond.

Life expectancy based on current age

Source: UN, Human Mortality Database. Data is for selected OECD countries: Australia, Canada, France, Germany, Italy, Japan, Spain, Sweden, UK, US

As a consequence, there are now more people aged over 65 than under 52. The oldest group (85 years+) is the fastest growing segment of the older population. Currently, there are 15 ‘Super Aged’ countries where more than 20% of the population is over 65, including Germany, Italy, France and Japan. By 2030, this is forecast to rise to 44 nations, and to 61 by 20503.

Forecast rise of ‘Super Aged’ Countries (20%+ of population aged 65+)

Source: United Nations

A positive ageing narrative offers economic benefits

The issue of ageing tends to focus on the final stages of life, such as retirement, pensions, and ill-health, so is largely viewed in terms of its economic burden to society. The cost implications of ageing are important, but provided the needs of an ageing population are properly managed, the benefits of this demographic shift could outweigh the costs. For example:

Longer working lives: Globally, labour force participation growth is expected to slow from 1.8% pa over the past 50 years to 0.3% pa in the next 504. “Improving healthy life expectancy could justify delaying retirement age across many economies”

Increased consumption: Increasing preventative health spending by 0.1 percentage points has been associated with a 9% increase in annual consumption by people aged 60+5.

Productivity gains: Rising life expectancy correlates to increased output6 – thanks to the formal, technical and tacit skills that older workers have accumulated.

One study concludes the economic benefits from health improvements leading to fewer early deaths and higher labour market participation could add $12trn or 8% to global GDP in 2040.

Fewer health conditions and expanded labour force participation could help global GDP rise by $12trn in 2040

Source: McKinsey Global Institute Analysis, Eurostat, ILOSTAT, Institute for Health Metrics and Evaluation, National Transfer Accounts project, Oxford Economics, OECDa

The five market opportunities of active ageing

The five market opportunities of active ageing

A new social contract: the multi-stage life

Realising the benefits of active ageing may require abandoning the ‘traditional’ three-stage life cycle, moving towards a multi-stage cycle with a variety of careers with breaks and transitions. This has the potential to provide societies with more choice and flexibility, and a better balance between work, leisure, family, finances and health.

From the three-stage life to the multi-stage life
The three stage life cycle is already showing signs of breaking...

Knot yet: Delayed marriage and parenthood

Young adults: Gap years, travelling and entrepreneurship

New stages could emerge in a multi-stage life cycle...

Extended retirement?: Even as people work into their mid-70s, the expected period spent in retirement is likely to be between 20-30 years.

Longer working life with multiple careers?: Career breaks to encourage re-skilling and re-learning

 

Source: Barclays Research

Bold policy and innovation are now required

For this multi-stage life cycle to be realised, governments would need to design innovative policies and public services to address older-age issues such as housing, employment, health care, infrastructure and social protection, among others.

There is also a major role for the private sector, with emergent opportunities in health care, technology, construction and leisure and service sectors. Our analysts categorise these into five core market opportunities. (see ‘The Five Market Opportunities of Active Ageing).

Ageing burden versus demographic dividend

Ageing is an inter-generational issue, with implications for everyone.  The extent to which societies prepare for and invest in an ageing population will determine whether it creates an additional burden or delivers a ‘demographic dividend’. Our analysis suggests that a new narrative focused on healthy and active ageing could help society maximise the opportunities that come from longevity, while minimising the costs.

United Nations

2 United Nations

3 Barclays Research, United Nations

4 McKinsey report, July 2020

5 International Longevity Centre in collaboration with Sanofi and Legal & General, September 2020

6 International Longevity Centre

Read the full report

Authorised clients of Barclays Investment Bank can log in to Barclays Live to read the full report.

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About the analysts

Hiral Patel is the Head of Sustainable & Thematic Investing within Equity Research at Barclays. Hiral joined the team in June 2018 following five years covering the European Technology, Payments and FinTech sector. Prior to that, Hiral qualified as a Chartered Accountant with KPMG, where she worked in Audit covering Financial Services. Hiral graduated from the University of Warwick with a degree in Economics, Politics and International Studies.

Katherine Ogundiya is a member of the Sustainable & Thematic Investing team within Equity Research at Barclays. She joined the team in August 2018, following completion of the Compliance graduate scheme at Barclays. Katherine read Law at the London School of Economics.

Anushka Challawala is a member of the Sustainable & Thematic Investing team within Equity Research at Barclays. Anushka joined the team in September 2018 following two years covering European Telecoms. Anushka graduated with a BSc in Management from the University of Warwick.

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