It’s official: the world is running out of babies.
Once upon a time (around 1900), the average woman had about six children. Enough to comfortably fill a family portrait and a minibus. Fast forward to now, and that number has dropped from six to below two across most of the developed world. According to the UN, in just 25 years two-thirds of humanity will live in countries where fertility rates are below the replacement level — also known as the point at which each generation effectively replaces itself.
Replacement level fertility sits at about 2.1 children per woman. Why the extra 0.1? Because not every child survives to adulthood, and not every adult is physically able to have children. The mathematical “sweet spot” that keeps a population stable is 2.1: two parents, two kids, and a little buffer for the realities of life. Fall below that threshold, and over time the number of deaths starts to exceed the number of births.
In plain English: we’re not currently making enough people to replace ourselves. And that has economists reaching for the panic button, because it’s not just about babies — it’s about how societies grow, spend and sustain themselves. By 2100, countries like Japan, China, Italy and South Korea could see their populations shrink by up to half.
It’s not quite Children of Men yet, but the trend isn’t looking good.
What happens when you invert a pyramid?
If you’ve ever seen one of those population charts shaped like a pyramid, you’ll know the drill: lots of young people at the bottom, fewer old people at the top. Well, that shape is changing. In many countries, it’s starting to look less like a pyramid and more like an obelisk — tall, skinny and top-heavy with retirees.
Across advanced economies and China, the share of working-age people is predicted to fall from 67% today to 59% by 2050. The global consumer landscape will tilt older too: seniors will account for a quarter of all consumption by mid-century, double their share from 1997.
Source: Apollo
In other words, the world’s shoppers are turning grey. And while that’s great news for retirement villages and hearing aid companies, it’s less ideal for GDP growth. The system we’ve built, where younger workers fund the lifestyles and pensions of their elders, starts to wobble when there are fewer workers and more pensioners cashing in.
When the economy retires
Here’s the uncomfortable truth: fewer babies today means slower economies tomorrow. Economists estimate that GDP per person could drop by 0.4% a year across developed countries between now and 2050. That might not sound like much, but stretched over decades, it’s the difference between thriving and treading water.
To keep up, countries will need to either double productivity (good luck with that) or have people work an extra one to five hours a week. Meanwhile, pension systems might need to siphon off half of all labour income just to support retirees.
That’s not exactly the future young people were promised. Instead of buying homes and starting families, they’ll be working longer to fund their parents’ golden years, like a kind of economic babysitting, but for adults.
. DM First published by GroundUp.