How Aging Societies May Affect Global Growth Prospects

Abstract

Over the next few decades, the United Nations (UN) has projected that the world will experience significant demographic shifts due to lower birth rates and longer lifespans.1 The world’s population aged 65 and above will increase from 12 percent today to 16 percent in 2050, doubling the old-age dependency ratio2 to 25.2. These demographic shifts would have material implications. Population aging and its dynamics will influence a number of economic variables and behavioral responses, particularly economic growth, productivity, labor force participation, consumption choice, personal savings and thus investment, and public finances. Population aging is unavoidable, but public policies and technological advances may limit some of its adverse effects.