Markets
Animation: Global Population by Region From 1950 to 2100
According to the most recent projections by the United Nations, the global population will rise from 7.6 billion to 11.2 billion people by 2100.
At this macro level, the global population is growing considerably – but at the micro level, the numbers are all over the map. It’s expected that some countries like Nigeria will see population numbers quadruple by 2100, while other places like China will see a decline by almost 40%.
This raises the question: how different do the regions of the world look in 80 years, in terms of population?
Population by Region (1950-2100)
Today’s animation comes to us from geographer Simon Kuestenmacher who used this U.N. data to show how population by region is expected to change over the coming years.
The chart shows expansive population growth in Asia until about 2060, which is when the regional population will peak at roughly 5.3 billion. At this point, the continent will make up 51% of the global population.
In addition, Africa’s population is projected to continue to boom until 2100, at which point it will come close to passing Asia’s total. As we previously showed you, Africa will also be home to many of the world’s largest cities by this time.
Factors of Influence
Although 83 million people are being added to the global population every year, this population growth differs greatly by region. As a result, it’s worth looking at two major factors to see why this is the case.
The first is the fertility rate, which has obvious implications on population growth. On a global basis, this rate (measured in births per woman) is close to 2.5, and by 2100 it will have dropped to 2.0.
However, as you’ll see in this next chart, which shows projected fertility rates, Africa is the only region that will still have high amounts of child births 30 years from now. This will be one major driver of the continent’s population boom.
Total Fertility in 2050 (Live births per woman)
The second measure that plays a big role in these projections is life expectancy. For each new person born, how long are they expected to live?
Until recently, the only countries that had a life expectancy that exceeded 80 years were in Western Europe, North America, and Oceania, with the notable exception of Japan. However, in the coming decades, even the world’s least developed countries will all be closing in on that same benchmark:
Life Expectancy in 2100 (Years at birth)
The Next 30 Years
According to these same estimates, it is expected between 2017-2050 that half of all global population growth will be in just nine countries (in this order): India, Nigeria, DRC, Pakistan, Ethiopia, Tanzania, United States, Uganda, and Indonesia.
Over that duration of time, it’s also projected that the populations of 26 African countries will at least double.
Markets
Recession Risk: Which Sectors are Least Vulnerable?
We show the sectors with the lowest exposure to recession risk—and the factors that drive their performance.
Recession Risk: Which Sectors are Least Vulnerable?
This was originally posted on Advisor Channel. Sign up to the free mailing list to get beautiful visualizations on financial markets that help advisors and their clients.
In the context of a potential recession, some sectors may be in better shape than others.
They share several fundamental qualities, including:
- Less cyclical exposure
- Lower rate sensitivity
- Higher cash levels
- Lower capital expenditures
With this in mind, the above chart looks at the sectors most resilient to recession risk and rising costs, using data from Allianz Trade.
Recession Risk, by Sector
As slower growth and rising rates put pressure on corporate margins and the cost of capital, we can see in the table below that this has impacted some sectors more than others in the last year:
| Sector | Margin (p.p. change) |
|---|---|
| 🛒 Retail | -0.3 |
| 📝 Paper | -0.8 |
| 🏡 Household Equipment | -0.9 |
| 🚜 Agrifood | -0.9 |
| ⛏️ Metals | -0.9 |
| 🚗 Automotive Manufacturers | -1.1 |
| 🏭 Machinery & Equipment | -1.1 |
| 🧪 Chemicals | -1.2 |
| 🏥 Pharmaceuticals | -1.8 |
| 🖥️ Computers & Telecom | -2.0 |
| 👷 Construction | -5.7 |
*Percentage point changes 2021- 2022.
Generally speaking, the retail sector has been shielded from recession risk and higher prices. In 2023, accelerated consumer spending and a strong labor market has supported retail sales, which have trended higher since 2021. Consumer spending makes up roughly two-thirds of the U.S. economy.
Sectors including chemicals and pharmaceuticals have traditionally been more resistant to market turbulence, but have fared worse than others more recently.
In theory, sectors including construction, metals, and automotives are often rate-sensitive and have high capital expenditures. Yet, what we have seen in the last year is that many of these sectors have been able to withstand margin pressures fairly well in spite of tightening credit conditions as seen in the table above.
What to Watch: Corporate Margins in Perspective
One salient feature of the current market environment is that corporate profit margins have approached historic highs.
As the above chart shows, after-tax profit margins for non-financial corporations hovered over 14% in 2022, the highest post-WWII. In fact, this trend has been increasing over the past two decades.
According to a recent paper, firms have used their market power to increase prices. As a result, this offset margin pressures, even as sales volume declined.
Overall, we can see that corporate profit margins are higher than pre-pandemic levels. Sectors focused on essential goods to the consumer were able to make price hikes as consumers purchased familiar brands and products.
Adding to stronger margins were demand shocks that stemmed from supply chain disruptions. The auto sector, for example, saw companies raise prices without the fear of diminishing market share. All of these factors have likely built up a buffer to help reduce future recession risk.
Sector Fundamentals Looking Ahead
How are corporate metrics looking in 2023?
In the first quarter of 2023, S&P 500 earnings fell almost 4%. It was the second consecutive quarter of declining earnings for the index. Despite slower growth, the S&P 500 is up roughly 15% from lows seen in October.
Yet according to an April survey from the Bank of America, global fund managers are overwhelmingly bearish, highlighting contradictions in the market.
For health care and utilities sectors, the vast majority of companies in the index are beating revenue estimates in 2023. Over the last 30 years, these defensive sectors have also tended to outperform other sectors during a downturn, along with consumer staples. Investors seek them out due to their strong balance sheets and profitability during market stress.
| S&P 500 Sector | Percent of Companies With Revenues Above Estimates (Q1 2023) |
|---|---|
| Health Care | 90% |
| Utilities | 88% |
| Consumer Discretionary | 81% |
| Real Estate | 81% |
| Information Technology | 78% |
| Industrials | 78% |
| Consumer Staples | 74% |
| Energy | 70% |
| Financials | 65% |
| Communication Services | 58% |
| Materials | 31% |
Source: Factset
Cyclical sectors, such as financials and industrials tend to perform worse. We can see this today with turmoil in the banking system, as bank stocks remain sensitive to interest rate hikes. Making matters worse, the spillover from rising rates may still take time to materialize.
Defensive sectors like health care, staples, and utilities could be less vulnerable to recession risk. Lower correlation to economic cycles, lower rate-sensitivity, higher cash buffers, and lower capital expenditures are all key factors that support their resilience.
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