And How Can we Profit?
By Ashish Advani
As you look out across the U.S. – across your hometown and your local big city, each and every one of us can pick out at least a few vacant retail spaces… it seems each medium-sized town has its own “ghost mall,” and at least a few abandoned strip malls.
How did that happen? Are we not the largest consumers in the world? Do we not need all the Malls we can make to continue our insatiable consumerism habits?
This problem’s been building for a while.
The simplest way to put this is; America is getting older. The median age of the American population is 37. The baby boomers (kids born between 1944-1964) are slowly beginning to retire. They are reaching the age of 65. The first round of baby boomers retired in 2007.
And this trend will only continue to escalate…
America is not the only country afflicted by the aging of its population.
Many of the world’s largest economies are headed down this same demographic hill. Japan’s median age is 44…the second highest on the planet. Italy’s median age isn’t far behind at 43, UK is 40; Australia is tied with the US at 37… As you can see, folks aren’t getting any younger here.
And an older population means lower consumption patterns. As folks get older, retire, and start to live on a fixed income, they have less need for consumer products. Now healthcare is an exception. But beside this sector, most other sector consumption patterns will gradually go into overall decline.
But, over on the other side, the developing economies are still quite young.
China’s median age is 27, along with Indonesia, while Pakistan’s median age is just 20. But it’s not until you look to India that you the most interesting facts…
1/3 of India’s population is below the age of 14 …and the median age in India is 24, which is even younger that that of China. And India has a total population is 1.1 Billion. India is expected to overtake China in total population by 2020, when the Indian population is estimated to be at 1.3 Billion and growing.
India also has an educated, English speaking and dynamic population. An average Indian in the city can speak English, is very entrepreneurial by temperament and is always looking to make money and grow his/her wealth base.
When You Add it All Up…
The Indian economy is expected to grow by 6% GDP next year, a rate that it’s consistently held up for the last few years.
Indians are continually increasing their disposable income. The younger, richer Indian population can now afford to buy a better living standard than ever before. The media is open without restrictions, giving their dreams access to the gadgets of comfort they have long desired.
They are eager to consume and the overall trajectory of consumerism is only going to head upwards for decades to come.
Granted, not all sectors of the Indian economy will grow evenly…but it’s a no brainer that the Consumer Goods, Electronics. Automotive, Food and Beverages, Travel, and Discretionary Spending sectors – to name a few – will continue to see double digit growth for many years to come.
What makes this growth story even more exciting is the fact that the overall economic growth is taking place against the backdrop of major political reform…
Bureaucracy is reducing, economic liberalization is deeply supported by the masses and foreign investments are being welcomed with open arms in most sectors. As history has proven time and time again, this translates into companies having blockbuster years in sales and profits.
Often times, when one sees a confluence as described above, we see significant long- term growth opportunities in an economy.
As long as we can select the correct companies in the right sectors, only one word comes to mind…
$$$ Cha-Ching $$$$.
Stay long India dear readers, stay long for a long time!!!
Editor, Dalal Street Insider
Source: Sovereign Society