Moody's analysts warn that population aging is highly likely to dampen economic growth in the near future. According to preliminary estimates, global GDP will shrink by 0.9 percentage points (p.p.) year-on-year in the next five years. Interestingly, the fastest aging populations are expected to be those located primarily in Europe
Analysts at Moody's predict a considerable drop in global economic growth in the next 10 years due to an unprecedented demographic collapse. Despite the recovery of the global economy after the coronavirus crisis, its prospects are not bright. The aging population will increase the fiscal burden as spending on health and social security will rise exponentially.
According to experts, the working-age population is expected to dwindle over the next 20 years, especially in Europe where the negative demographic trends persist. Many countries such as Germany, Japan, Italy, Spain, and South Korea, will face a decline in the working-age population. In compassion, in the US and the UK, this figure will increase but at a slower pace than in the past decade.
The decline in the labor force will become a real challenge to the implementation of health care programs, social benefits, and social security. Previously, immigration was the driving force behind the strong economic growth of the working-age population in Europe. However, currently, its pace has slowed significantly.
Economists at Moody's believe that due to the lack of qualified workers, companies will have to tackle this issue by recruiting more women and older employees. What is more, to mitigate the negative effects of aging, experts suggest using innovative technologies. The integration of digital technologies, advanced robotics, and artificial intelligence after the pandemic could provide a boost to productivity growth at the workplace, the agency said in its report.
According to the UN demographic forecast made two years ago, the world's population will grow to 8.5 billion people by 2030. Nowadays, this figure totals 7.8 billion. Since 1970, the median (average) age has been growing continuously and is now 31 years old. Taking into account the preliminary calculations, by 2030 it will reach 33 years, and by 2050 - 36.2 years. According to the WHO, the population of a country is considered old if the proportion of people aged 65 years or more exceeds 7%. This trend is rather noticeable in Russia and other emerging markets countries.
