Today's Edition
By: Sultan Khalifa Abdulla Ali AlRubaei*
Demographic changes have been a constant feature of human history, with population growth patterns evolving over time. However, today's trends of ageing populations, declining birth rates and increasing migration are set to reshape national economies in ways that may significantly impact growth.
These effects are particularly evident in major economies like Germany, Italy, Japan, and China, but emerging economies are not immune, especially those lacking the financial resources to cushion the shock.
According to United Nations projections, the global population is expected to reach 8.5 billion by 2030, increase to 9.7 billion by 2050, and peak at around 10.3 billion by the mid-2080s, before declining slightly to approximately 10.2 billion by 2100.
However, the number of elderly people is projected to surpass the number of children. This change is driven by multiple factors, including most notably declining fertility rates.
In fact, more than half of the world's countries now have fertility rates below 2.1 live births per woman, the level required to maintain a stable population growth rate.
Uncontrolled population growth may lead to social and political tensions as well as economic crises, especially when societies have to realign their expectations with the realities of a changing demographic landscape.
A declining population often results in reduced tax revenues, slower commercial activity and weaker consumer demand.
In addition, innovation may decline due to a shrinking talent pool.
In the near future, low-income countries may face the same ageing challenges currently seen in wealthier nations across the West and East Asia.
Already, about one-fifth of all countries, including China, Italy, South Korea and Spain, are experiencing ultra-low fertility rates. Nevertheless, fertility rates remain high in some of the world's poorest countries, particularly across Africa.
One of the clearest economic impacts of demographic change is the ageing of the workforce.
According to the World Health Organisation, the proportion of the global population aged 60 and above is expected to double to 22% by 2050.
This shift will result in higher retirement ages, increased labour costs and shortages of skilled workers. This combination poses a particular challenge to countries that rely heavily on labour-intensive industries.
A striking example of these demographic challenges is China, the world's second-largest economy after the United States. Much of China's economic success has historically depended on its large population, which served as a low-cost, productive labour force, giving Beijing a competitive edge in global markets.
However, the effects of the one-child policy, despite its repeal, have led to a decline in population for the third consecutive year as of 2024, with deaths outnumbering births.
This trend signals that the world's second-largest economy will increasingly struggle with a shrinking labour force and a reduced consumer base.
In Europe, negative population growth has persisted for over a decade. By 2040, projections indicate that Asia, Latin America and the Caribbean will join Europe in experiencing negative growth rates.
To effectively address the consequences of demographic change, governments must take proactive steps, particularly in emerging markets. These include strengthening labour markets through regulation, protecting workers' rights, creating more flexible job opportunities and ensuring the optimal use of resources in the workplace.
Additionally, governments should invest in quality education and training, skill development and human capital, enabling individuals to reach their full potential.
Flexible retirement policies, along with health and wellness strategies, especially those focused on preventive care, will also be essential to improving overall quality of life.
Technology will play a central role in addressing demographic challenges. Advances in artificial intelligence and robotics can support or even replace certain human tasks in the economy, provided there is adequate human oversight.
These technologies also offer significant potential for advancing healthcare and reshaping population structures in a sustainable way.
To achieve prosperity, especially in open economies, countries will need to actively attract global talent. In societies facing population decline, immigration becomes a vital tool to replenish workforces, broaden tax bases and boost consumer spending. Moreover, migration can benefit countries of origin through remittance flows, although this may also come with social and cultural changes for host societies and economic impacts on the countries migrants leave behind.
There are growing signs that demographics are bringing about drastic changes, as the projected 18% increase in the world's population between 2025 and 2050 could fundamentally alter the landscape of development, along with the economic and social burdens associated with population decline.
Countries that adopt proactive migration policies, invest in human capital and strengthen social protection systems may be better positioned to balance the preservation of national identity with development goals, ensure labour force sufficiency, and maintain economic sustainability in the face of demographic transformation.
This requires a comprehensive and integrated policy approach, spanning the social, economic, educational, health and security sectors, to support national development objectives and effectively manage the impact of demographic changes on both society and the economy.
*The writer is a researcher at TRENDS Research & Advisory
