Emerging markets – old or rich…which comes first?
An interesting trend is apparent if you take a closer look at emerging markets demographics.
It is common knowledge that the largest emerging economy―China―is getting old before getting rich. We thought it would be worthwhile to investigate if this phenomenon is common among emerging markets.
We found out that quite a few of them are in the same boat. The first chart below shows that Russia and Central Europe are hitting key per capita income milestones at a more advanced age than, say, Japan. Further, the same process is taking place in parts of Latin America (Chile, Peru, Colombia) and Asia (Thailand, Vietnam). One country we are watching with great interest is India. India is still “poor” on a per capita income basis. However, its median age/income trend looks closer to China than to other regional peers like South Korea or Malaysia, which got richer at a relatively younger age.
Chart 1: Emerging markets demographic trends – China is just the tip of the iceberg
Source: VanEck Research; Bloomberg LP
If you have a look at this second chart, below―you can see what we are talking about. This is the reasons why structural reforms (including digitalisation) and responsible policies are of such importance―in India and across emerging markets.
Chart 2: Emerging markets getting older before they get richer
Source: VanEck Research; Bloomberg LP
Published: 18 December 2020
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