Seeking Alpha
Technologist, writer, investor
Profile| Send Message|
( followers)  

Summary

  • The World Bank Group predicts global population will reach 9.4 billion by 2050.
  • Between now and 2050, population increases in BRIC states alone will eclipse total United States population.
  • Per capita standard of living in BRICS countries will rise on average 36% compared to 6% in the United States.

BRICS is an acronym for five major emerging economies:

  • Brazil;
  • Russia;
  • India;
  • China; and
  • South Africa

This group was formerly known as BRIC before South Africa was included in 2010. All five BRICS countries are G20 members. Collectively G20 countries account for approximately 80% of global economic activity and two-thirds of the global population.

Figure 1. World Map With BRICS States Highlighted Green

The BRICS states are seen by investors and multi-national corporations as the markets to invest in today because their economies and population are predicted to expand the most rapidly over the coming decades compared to other developing states.

This article will present information on the projected population growth of BRICS states, provide context to the predicted population growth by discussing the birth to death ratio of BRICS states, provide an overview of the economic activity of BRICS states and conclude with a high-level recommendation for global investors based on the information provided.

Table 1 and Figure 2 provide insight into predicted population growth for BRICS states based upon data publicly available from The World Bank Group.

(click to enlarge)

Table 1. Projected Population (in millions)

2015

2020

2025

2030

2035

2040

2045

2050

Brazil

204

211

218

224

228

232

233

234

Russia

145

146

148

149

150

151

151

151

India

1,283

1,354

1,418

1,472

1,515

1,546

1,564

1,570

China

1,370

1,398

1,422

1,442

1,458

1,470

1,476

1,478

South Africa

53

56

58

60

62

63

64

64

United States

321

332

342

349

356

360

363

364

As seen in Table 1, it is predicted that India will surpass China as the most populous state in the world with approximately 1.5 billion residents by 2030 and go on to add at least another 100 million inhabitants by 2050. Some estimates predict India's population will be closer to 1.9 billion by 2050.

In total, over the next four decades the BRICS countries' populations are predicted to increase by at least 400 million, which currently is and will still be greater than the total population of the United States in 2013 and 2050, respectively. China will have more than 3x the U.S. population, and India nearly 4x.

These massive increases in, and sheer total size of, population are the direct result of the difference between the birth and death rate in these countries.

Table 2. Five-Year Average Historical BRICS Births And Deaths (per 1,000 people)

Births

Deaths

+/-

Brazil

16.0

6.4

9.6

Russia

12.2

14.2

-2.0

India

21.6

8.0

13.6

China

12.0

7.1

5.0

South Africa

21.8

14.2

7.6

United States

13.6

8.1

5.5

Source: The World Bank Group

Table 2 shows the average Births and Deaths per thousand people, and their relative difference (+/-), for each BRICS state and the United States over the last five years (2007-2011) from data publicly available from The World Bank Group. Though intuitive, Table 2 helps provide context as to why each BRICS country's population is predicted to move in a particular fashion. For example, Russia's population is predicted to increase by only approximately 6 million people between 2015 and 2050 while South Africa is projected to increase nearly twice that, ~11 million. Understanding that over that last five years Russia has, on average, has had more deaths than births helps to explain why its population is projected to increase so little.

As interesting and important as the trends in global population growth are, corporations and investors will be wise to follow the money too.

Table 3. Projected BRICS Gross Domestic Product (USD per capita)

2015

2020

2025

Brazil

$13,504

$16,283

$17,188

Russia

15,763

17,840

18,487

India

1,871

2,390

2,566

China

8,830

13,200

14,849

South Africa

9,054

11,067

11,728

United States

53,991

56,481

57,215

Table 3 shows projected per capita Gross Domestic Product for BRICS states and the United States in five-year increments between 2015 and 2025 based upon data publicly available from The World bank Group. GDP per capita is often considered an indicator of a country's standard of living. The theory is the workforce (i.e. population) will benefit from wage increases as output increases. In reality, GDP is a measure of economic activity, which is a separate concept.

Over the next decade, the percentage increase in economic output, from greatest to least, is predicted to come from China, India, South Africa, Brazil, Russia and lastly, the United States.

Table 4. Projected Percentage Increase In GDP Per Capita Among BRICS (2015-2025)

Brazil

27.3%

Russia

17.3%

India

37.2%

China

68.2%

South Africa

29.5%

United States

6.0%

Source: Table 3

Assuming GDP does represent living standards, as is standard practice, the standard of living for residents of India and China are predicted to increase the most, nearly 70% and 40%, respectively. Keen readers may notice that while the United States increase is only 6% between 2015 to 2050, in 2050 the GDP per capita is expected to be nearly four times that in China and an incredible twenty-two times that in India.

Conclusion

All this fuss about population growth and increasing standards of living is important for investors because more people with more money means increased purchases of goods and services from companies! Companies that investors can own a part of!

My attention will be focused on Brazil, India and China (BIC) as I continue to look for investment opportunities outside the United States. The BIC states are the largest growing and improving economies of the BRICS, with India and China being among the largest and fastest increasing economies in the entire world.

I cannot recommend investors looking to invest abroad consider Russia in general based upon the meager increases in both projected population and GDP per capita, and additionally based upon old adage: fool me once, shame on you; fool me twice, shame on me.

Investors looking to make purchases of foreign companies who do business in India and China are in luck! American Depository Receipts, or ADRs for short, offer interested investors the ability to participate in these global markets through publicly-listed companies trading on American stock exchanges.

For example, an investor interested in participating in the telecommunications market in India can purchase shares of Vodafone (NASDAQ:VOD). As I read through Vodafone's 2013 10-K I noticed Vodafone has 152 million mobile subscribers in India! Remember, India's population is predicted to increase by at least 300 million by 2050. Vodafone may just be in the position to capitalize on this tremendous population growth.

In China, a prospective telecommunications investor has even more choices:

  • China Telecom Corp. Ltd. (NYSE:CHA);
  • China Mobile Limited (NYSE:CHL); and
  • China Unicom Limited (NYSE:CHU).

China Telecom Corp. Ltd. has 186 million subscribers, China Mobile Limited (the world's single largest carrier by subscriber count) has 767 million subscribers and China Unicom Limited has 287 million subscribers. With nearly the entire population of China accounted for among these three carriers, each are bound to reap some benefit from the nearly 70% increase in the standard of living expected to seen in China by 2050 as these Chinese consumers renew their mobile contracts at higher-adjusted prices and upgrade their digital devices to the latest and greatest new model.

To put things in perspective, American telecommunications companies AT&T (NYSE:T) and Verizon (NYSE:VZ) have 110 million and 103 million subscribers, respectively. Further, AT&T and Verizon operate in a market, the United States, whose population size is expected to increase by only 6% over the next forty years while American citizens will see a muted (compared to BRICS states) improvement in their standard of living.

Think the BRICS will crumble before their economic mortar takes hold, or American companies are better poised to take advantage of the increases in population and standard of living in non-U.S. markets? Comment below!

Source: 2 BRICS You Should Use To Build Your Portfolio