The ageing population and the economic inference

ageing and economic inference

Throughout the course of human history, instances of intricate problems and us, collectively, finding a solution to the problems is present. Different ages have their own records and we, more or less every time, have successfully solved our problems. This has been the norm until now. What we face today, quite simply put, is inevitable. It is none other than the workings of ‘father time’.

Elderly mutual fund investors banking on especially aggressive hybrid funds to secure a regular income via dividends are unhappy these days because of the Crude oil price.

The soaring crude oil demand from Asia that is coupled with the recent price volatility has an increased need to hedge the commodity. Asia’s increased oil thirst has also created a greater need to hedge the commodity in this price volatility.

Economists are not too optimistic about the phenomenon of an ageing population on a global scale especially in this scenario. This is especially concerning because of the unstable global economic and financial condition this might lead to. This economic inference has indicated that it will not only impact economic growth but overall health care costs, social support mechanisms and living conditions as well.

According to the United Nation’s data on global ageing population, by the end of the 21st century, as the global population reaches 11 billion, more than 3 billion will be 60 years or above. According to another such report, by Second World Assembly, the 60-year-olds have overtaken 15-year-olds in numbers.

Why is this shift happening now?

Let us look at certain key points that will explain the global ageing population and the rate they are growing.

Increased life expectancy

Humans have been living longer now than ever before. According to records by the United Nations, the average life expectancy was 47 years back in 1950, and now it has bumped up to 65 years in 2010. It also calculates this bar to go up and set the norm at 75 years by 2050.

Globally, the ageing population was 6.9% of the population in 2000 and can go up to 19.3% in 2050.

Health care and medical advances

The average addition of a 24-year increase in life expectancy in global life expectancy is due to modern medicine. Not more than 100 years ago, a child contracting with pneumonia was life-threatening, which is no longer the case. Development of vaccines against the otherwise threatening polio, measles, pox has allowed children to grow beyond the maximum age expectancy in the last 100 years.

Lower fertility rates

As the elderly grow in numbers, their counterparts are not being able to replace them. This is because of lower fertility rates. In 1955, the average number of children birthed per woman was 5.0, whereas the number has dwindled down to 2.0 in 2005. This slow replacement rate for the ageing population severely impacts the world population growth rate.

The economic impact of this new elderly population

Population shrinking

As the ratio of ageing population and fertility rates is not balanced, the entire population will be diminished. With the elderly dying off sooner, a shrinkage in population will happen. This ageing population will have an impact on the economic inference.

Diminished economic growth

Every nation experiencing population shrinkage will see a decrease in financial capitals. As a result,economic growth will be curbed and options for long-term investment will be less. Lesser number of youth and a greater number of elderly will also see a drop in public savings as the governments will be using the funds for welfare and elder care.

Pensions

With the ever-increasing ageing population, the economic inference will tend to dictate for more pension funds to be added for the elderly. This will cause an economic imbalance.

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