Pethokoukis, Economics, U.S. Economy

The end of global population growth may be almost here — and a lot sooner than the UN thinks

091313com

Make room! The current world population of roughly 7.2 billion will rise to 9.6 billion by 2050 and then to 10.9 billion in 2100, according to the most recent United Nations projections.

Wait, don’t make room. Demographer Sanjeev Sanyal of Deutsche Bank thinks the UN is way off. His calculations find the world’s overall fertility rate falling to the replacement rate in 2025, although global population will continue to expand thanks in part to rising longevity, for another few decades. Then comes the Big Shrink. Sanyal:

We forecast that world population will peak around 2055 at  8.7 billion and will then decline to 8.0 billion by 2100. In other words, our forecasts  suggest that world population will peak at least half a century sooner than the UN expects and that by 2100, and that level will be 2.8 billion below the UN’s  prediction. This is obviously a radically different view of the world.

The missing 3 billion. Below are two charts, the first with the UN’s projections, the second with Deutsche Bank’s:

091313population

091313population2In a recent DB report, Sanyal says even a cursory glance at UN projections reveals oddities. For instance, the UN projects Nigeria’s population to soar to nearly 1 billion by 2100 versus 160 million today. But that assumes Nigeria’s fertility rate stays locked at current levels even though other emerging countries like Iran and Bangladesh have experienced large declines in their once-high fertility rates. Sanyal sees Nigeria’s population growing only half as much.

Or look at the United States. The UN projects the US population to rise to 462 million from 314 million today, despite a fertility rate already below replacement. Can immigration really make up the difference? Sanyal points to a recent study by Pew Research, which found that the US birth rate fell to a record low in 2011 with immigrant women experiencing the sharpest declines. And of course most immigrants are already coming from countries with low and falling birth rates.

Also strange: the UN projects a huge population increase while at the same time also projecting the share of the world’s population living in cities to rise from today’s 52% to over 67% by 2050. Urbanization is the “the strongest contraceptive known to man,” the researcher says, and along with rising per capita income and female literacy should cause a large decline in the world’s birth rates.

Sanyal outlines some major societal and economic implications:

1. Aging societies will have to adjust soon to the fact that it is not possible for economies to sustain a retirement age in the early sixties. With people routinely living well into their eighties, it will soon be common for people to extend their working life into their mid-seventies … Societies that cannot make the socio-political adjustment to this new reality will struggle in the 21st century and will unduly burden the shrinking base of young people entering the workforce.

2. An aging does not imply a boom in retirement homes and an ever expanding medical sector. Yes, there will be more people in their sixties and seventies, but they will largely be fit and working. While there will be some increase in the medical support needed to keep this cohort going, it should not be blindly extrapolated from the past. Meanwhile, as anyone with children will know, falling birth rates will reduce demand for medical care from a high maintenance segment of the population. This implies a change in the mix of medical care rather than a spiraling increase in per capita medical support .

Thus, the main impact of aging will be the extension of active, working adulthood rather than a situation where large portions of the population are living is a prolonged geriatric twilight. In turn, this will impact consumption patterns, urban real estate and even the education system. For instance, university systems will have to be reoriented to deal with middle-aged workers who need to update their skills over a 50- year career or perhaps want to completely change their profession. In contrast, the intake of younger cohorts will ease off due to the shrinking pipeline coming out of secondary schools. This implies a big change in the way education systems are set up.

3. The global demographic shift is not a developed country issue since the shift has been faster for many emerging markets. Russia already has a shrinking workforce and many Latin American countries, contrary to popular belief, have TFRs that are at or below the replacement rate. … The rapid shrinking of China’s workforce from 2020, which is now unavoidable, will have a major impact on the dynamics of the world economy (even allowing for some older workers working longer). As argued in an earlier report in this series, China will transform itself from being the “factory to the world” to becoming the “investor to the world.” This will create opportunities for younger emerging markets like Indonesia, Philippines and, most importantly, India to enter market segments being vacated by China. In turn, they will be followed by even younger countries like Nigeria. Nonetheless, it should be emphasized that demographics alone is not sufficient to generate growth and cannot substitute for sensible policy leadership.

4. Some developed countries may do surprisingly well. The one developed country that stands out in our model is the United States. Even though our population growth projections are more moderate than those of the UN, the US can be expected to continue to enjoy an expanding working-age population till the 2050s (i.e. longer than many emerging economies). Germany’s low birth rate implies a declining population but we feel that it will be much more successful in absorbing immigrants than anticipated by the UN. Thus, its demographic trajectory may not be quite as dire as generally believed.

The geoeconomic and geopolitical ramifications are vast. Shrinking, aging populations are likely bad news for economic growth and innovation. And the Deutsche Bank report is even gloomier than Jonathan Last’s great book on the topic, What to Expect When No One’s Expecting: America’s Coming Demographic Disaster. The subjects of fertility, aging, and population growth are worthy ones for US policymakers.

10 thoughts on “The end of global population growth may be almost here — and a lot sooner than the UN thinks

  1. Sure policymakers should keep an eye on it, but considering the disasters and problems created by government–Syria, Egypt, Libya, Iraq, Afghanistan; huge deficits and debts and unfunded promises; a health-care “reform” based on forcing healthy people to pay sick people to be sick; an absolutely worthless “stimulus;” housing boom and bust; prices edging up…I think it wise to remember Jesus, President of presidents, is rather libertarian, and give people maximum freedom to make their own adjustments, with a minimum of regulations and programs.

  2. Fascinating. One of the very tricky parts is if developed countries like the US and Germany continue to attract immigrants, then those people must be subtracted from some of the other projections. For example, Chinese will undoubtedly continue to move to the US, so the Chinese estimates should reflect emmigration.

  3. If the Europeans were smart, instead of admitting blacks and Muslims to help cushion their demographic decline, they would be aggressively recruiting young whites from the US and the rest of the New World to return to the homeland. This would allow them to avoid the immediate (relatively) economic fall-out resulting from population decline, and 100 years from now, Europe would still be European. Economic stagnation or not, how hard would it for, say, Italy to convince an Argentine that his future, and those of his progeny, might be more prosperous and fulfilling in Italy than in Argentina? Especially if offered the right tax incentives?

    • you are a dirty idiot, you look at things as it is right now, do you think blacks and muslims will still be exactly as they are today is 20 years time??? blacks might be better than any race in the next 20 years, so i wonder if you will make the same statement assuming blacks and muslims were better thanwhat they are today, or do you think christianity is as it is today as it was 30 years ago??? if so as the gays about castration or china about development as it is today??? stupid asshole.

      • I don’t think you’ve read these projections at all. Most of Africa is going to be overpopulated and is going to lack food and fresh water. They’re also going to have a hard time with employing people for jobs when the population is insanely high. I don’t see Africans nor Muslims doing good in the future I see them doing worse.

  4. The #1 implication should be adopted immediately. Retiring at 60-65 is unsustainable right now. Bump it to 70 asap, with built in plans to tie it to average life expectancy so that it can keep going up if people keep living longer.

  5. South Africa has exactly the same population projections by both the DB and UN? Coincidence, laziness or SA is uniquely predictable?

    More seriously, the crash may be earlier and more severe than anyone thinks.

    We are moving from a peasant world where children are an insurance for old age to a cash world where children drain cash. Further education, labour mobility, etc means that children won’t be around to help out and savings or taxes will have to pick up the slack. Medical advances mean parents focus on quality not quantity. Urbanisation just adds to these forces.

  6. DB figures are UN figures with a bunch of assumptions changed. The assumptions that DB disputes only affect some countries, so – naturally – any country where none of the disputed assumptions apply gets identical projections.

    The assumptions where there is disagreement are, IIRC, that very low TFRs will revert to the mean (UN); that urbanising countries will have falling fertility (DB); that big sex differences in the population will have no effect (UN); that very high TFRs are unsustainable (DB).

  7. Just my two cents,

    but doesn’t anyone else find it extremely worrying that even at low variant projections, nigeria will have 500 million people in a relatively tiny area? is that even ecologically possible in any way? it’s just scary to think about

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