The global investment landscape is undergoing a “tectonic shift” according to speaker Scott Berg, portfolio manager, global large-cap strategy, with T. Rowe Price. Demographics is one of the biggest factors that will drive emerging market growth in the coming years, as the size of the working population in these countries grows exponentially. “There is a strong correlation between the working population and economic activity,” he said, adding that the aging population in developed economies stands in stark contrast to the young population profile in the emerging world. Berg calls this the “demographic dividend” that results when a huge population of younger people finally moves into the workforce.
As economic influence shifts quickly to emerging markets, emerging market weights will continue to grow higher as a percentage of the global opportunity set. Says Berg, the percentage of global GDP in emerging markets is now just 35% versus 60% for developed markets – that figure is going to change drastically in the next 10 years, with emerging markets reaching 50% of global GDP in a short span of time.