Danske Research Team
Danske Bank A/S
Demographics will likely play a key role for economies and markets in the coming decades, In the first paper on a series on the impact of changing demographics on economic growth, we dive into the outlook for working-age populations.
The working-age population in the US will likely continue to grow over the coming decades in contrast to Europe, Japan and South Korea, where it will likely shrink further. The Nordics, excepts for Finland, will likely see modest growth.
India's workforce is predicted to surpass China's, becoming the largest globally, while countries like Indonesia, Pakistan, and Nigeria will experience significant growth in their working populations.
Time to play close attention to demographics
Demographics is one of the few things that can tell us quite a lot about the future with quite high certainty. We know how many people that are alive, what the age structure within a country is and we know what the expected length of a life is on average. The most uncertain aspects of demographics usually relate to migration shocks or surprising changes in fertility trends. From an economic perspective, legislative changes to the retirement age could also be important, which could shift expected changes in e.g. working age population.
Demographic changes can have far-reaching and dynamic effects on the economy. Changes in age structure affect consumption patterns, investments, labour market dynamics and public finances among many other things. Demographics is also key in understanding the growth potential of a country or region. On the other hand, demographics is not the truth; innovation, changes in preferences or legislation can change presumed effects from demographics.
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