Major economies are heading toward a "population collapse" by 2100 because of falling fertility rates, new research has found.
A report by the McKinsey Global Institute (MGI) on Wednesday, warns the rate of births is way below that needed to sustain current populations in may countries across the globe.
What's New
By 2100, populations in major economies will fall by 20 to 50 percent, based on U.N. projections, the study says.
This is because two-thirds of the world's population live in countries with fertility rates below the "replacement rate."
In developed countries, an average of 2.1 live births per woman is considered the threshold needed to replace the population. In 2023, American families had an average of 1.94 children, according to Statista.
Over the past quarter century, some 90 percent of the world's countries have seen the fertility rate decline, while life expectancy has increased in most places.
Researchers wrote: "Falling fertility rates shift the demographic balance toward youth scarcity and more older people, who are dependent on a shrinking working-age population. Longer life spans accelerate the shift."
What Will Be The Consequences Of Depopulation?
One of the major fallouts of declining population around the world will be that younger people will live in an economy with less growth while simultaneously having to support bigger groups of retired people, with seniors accounting for a quarter of global consumption, the study said.
The world's current support ratio is 6.5, meaning there are six working-age people supporting one elderly person. This is a significant decrease from what it was in 1997, when the ratio was 9.4, and McKinsey predicts it will reach 3.9 by 2050.
"The current calculus of economies cannot support existing income and retirement norms—something must give," researchers wrote.
They added: "In confronting the consequences of demographic change, societies enter uncharted waters. Absent action, younger people will inherit lower economic growth and shoulder the cost of more retirees, while the traditional flow of wealth between generations erodes."
What Can Be Done About Depopulation?
The report essentially calls for countries to focus on increasing fertility rates. It says: "Long-standing work practices and the social contract must change. More fundamentally, countries will need to raise fertility rates to avert depopulation—a societal shift without precedent in modern history."
It also calls for higher productivity, more work per person and effective migration.
Immigration has long been a mitigator for depopulation in some places, including Europe and the U.S., with immigration "accounting for most of the growth" expected in the U.S. this year, William Frey, a demographer and senior fellow at The Brookings Institution told Newsweek.
Frey said immigration is "vital for population growth and reduced aging," citing his 2023 report, which concluded: "In a future of decreasing births and increasing deaths across an already aging population, immigration levels are crucial in leading to national growth as opposed to decline, and countering what would otherwise be extreme aging."
But, in Europe, in the way that it is currently taking place, it is not enough to offset the decline of Europe's population effectively, experts say.
Theodore D Cosco, a research fellow at the University of Oxford's Institute of Population Aging told Newsweek that while attracting "well-educated, well-integrated migrants may be able to offset some of these challenges, high immigration without proper integration or education selection may increase dependency."
"A focus on education, strategic migration, and effective labor policies may be able to provide and sustain economic stability despite demographic shifts," he said.
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