One of the main demographic shifts in the world today is an ageing population.
In developed countries, life expectancy has increased and fertility rates have fallen, leading to countries that have a lot of older people and fewer working-age citizens.
And the economic implications of this shift are severe. When there are fewer people working, growth slows down — both within countries and globally.
Now, a new report from German bank Berenberg has used over 100 years of economic data, as well as UN projections, to attempt to figure out what exactly the world will look like, demographically, in the next fifty years. The findings are pretty staggering.
Japan has always been the epitome of this change to an older and smaller population — the population began falling in 2004 and hasn’t stopped. Economists have recently identified a similar problem in China as well, where the working age population has begun to shrink.
But this report shows that within fifty years, the problem of an ageing and shrinking population is likely going to affect most countries.
For one thing, Berenberg projects that life expectancy is going to keep increasing and fertility is going to keep decreasing on a global scale. The number of countries with high life expectancies (over 75 years old) and low birth rates has been steadily increasing since the mid-twentieth century, and it’s going to keep rising. Berenberg projects that over 75% of countries will reach this by 2050.
Taken together, long lives and low birth rates means that the percentage share of older people in these countries — and in the world — will increase as well. This isn’t such a steady change: The number of countries with a high percentage of citizens older than 65 is set to skyrocket within a few years, as will the number of countries with negative population growth.
That means that the demographic problems that have almost crippled Japan in the last few decades are going to be impacting about 40% of all countries by 2050.
The magnitudes of these changes do vary country by country. For China, the situation looks dangerously similar to Japan’s
. Its historical data and projections follow Japan’s almost exactly — but 25 years later.
The dependency ratio is the ratio of non-workers to workers. It’s a commonly used measure of the age structure of a population, because it compares the number of people who consume things but don’t work (so, the very young and the very old) to the number of people who actually produce things (the working-age citizens). In China, as in Japan, the ratio of dependent citizens is about to skyrocket.
As for Europe, the UK and France are ok for now, according to Berenberg. But the rest of the eurozone is expected to age extremely rapidly. In Italy and Spain, the projections estimate that over one-third of the population will be older than 65 by 2050. Eastern Europe is especially vulnerable: The ten largest population declines by 2050 are expected to take place in Eastern Europe.
The US, however, should be fine for a little while.
“While the US marginally lags the other three economies in terms of life expectancy,” the report states, “it is expected to sustain a much higher fertility rate in the future, creating an important economic advantage.”
The US is less healthy than other developed countries — a lot of the difference in life expectancy can be chalked up to higher mortality rates below age 50. But birth rates are high enough to keep the working-age population larger than in other countries.
The researchers note, of course, that these are just projections, and that things may or may not work out exactly as they predict. People adapt, and economies adapt.
But no matter what happens, the shift to an older population is taking over much of the globe — it’s not limited to a few countries, and it’s not unique to Japan. “Japan is the playbook,” the authors write, “not the exception.”