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Six key demographic themes facing the global economy
The UN has recently released the biennial update of its flagship World Population Prospects report. In this week’s economic brief, we highlight six key demographic themes emerging from the 2024 report.
1. The global population continues to climb, but growth is trending lower
The UN estimates that the global population rose from 8.0 billion in mid-2022 to 8.2 billion in mid-2024. Global population is forecast to rise to a peak of 10.3 billion in 2084 under the UN’s medium projection. This is slightly lower and earlier than the UN’s prior forecast in 2022 for a peak of 10.4 billion in 2086. The UN’s latest projections remain significantly below those from nearly a decade ago in 2015, when it expected global population to reach 11.2 billion by 2100 and peak next century. Global population growth is forecast to average 0.7% per annum between 2024 and 2050, a marked slowdown from the average 1.2% growth experienced over the past 25 years.
2. India has overtaken China as the world’s most populous country
India is estimated to have overtaken China in 2022 as the world’s most populous country, a little earlier than previously thought, with its population rising to 1.45 billion in mid-2024. India’s population is forecast to peak at 1.7 billion in 2061. Nonetheless, population growth in India is forecast to average 0.6% p.a. over 2024-2050, less than half the 1.3% p.a. growth experienced over the past 25 years.
China’s population is forecast to fall from 1.42 billion in 2024 to 1.26 billion by 2050, a decline of -0.5% p.a. on average. The UN has downgraded these population growth forecasts from -0.3% p.a. in their 2022 report. More significant downward revisions were evident towards the end of the century, with China’s population now forecast to drop to just 633 million in 2100 compared to 767 million in the UN’s prior projections.
3. Divergent demographic trends across regions and countries
Population is estimated to have already peaked in 63 countries. Over 2024-2050, population declines are expected to be seen in Hong Kong (-0.8% p.a.), Taiwan (-0.7% p.a.), Japan (-0.6% p.a.), Poland (-0.6% p.a.), China (-0.5% p.a.), South Korea (-0.5% p.a.), Italy (-0.5% p.a.), Germany (-0.3% p.a.), Spain (-0.2% p.a.) and Russia (-0.2% p.a.).
Advanced Asian and emerging & developing European economies face the biggest demographic challenges, with populations in these regions forecast to decline by 0.6% p.a. and 0.3% p.a. respectively between 2024 and 2050. Advanced European economies are expected to fall by 0.1% p.a. on average over this period, although significant divergence is evident across countries within this region. Much stronger population growth, albeit slower than seen historically, remains evident in Sub-Saharan Africa (+2% p.a.) and the Middle East & Central Asia (+1.4% p.a.) over 2024-50. Modest growth is expected in North America (+0.4% p.a.) over this period, with similar growth seen on average across Latin America & the Caribbean (+0.4% p.a.).
4. Australia to outperform other advanced economies
Australia has the 2nd strongest population growth outlook among advanced economies over the next 25 years, only eclipsed by Israel. The UN estimates Australian population growth will average 0.8% p.a. between 2024-2050, compared to flat growth on average across advanced economies.
However, the UN forecasts have very conservative estimates of net overseas migration for Australia, averaging just 150,000 p.a. over this period. In contrast, the Australian Government assumes 240,000 p.a. in its 2023 Intergenerational Report (IGR), with population growth averaging 1.1% p.a. over 2024-50 in the IGR. By 2063, the UN projections imply Australia’s population will reach 35.2 million, well below the 40.5 million projected in the IGR. In our view, the UN estimates are overly conservative, and we continue to forecast long-run migration and population growth close to the IGR projections.
5. Population ageing is gathering pace
The combination of declining fertility rates and rising life expectancy are continuing to lead to a significant increase in population ageing across the world. This is particularly the case amongst advanced economies, where the share of population aged 65+ is forecast to rise from 21% in 2024 to 28% by 2050. Ageing demographics are most prevalent in advanced Asian economies, where the 65+ share of the population is forecast to rise from 25% in 2024 to 38% in 2050. Across the major economies, the countries facing the biggest challenges from population ageing and a sharp rise in the 65+ share of the population include Hong Kong (22.7% in 2024 to 46.4% in 2050), South Korea (19.3% to 39.7%), Japan (29.8% to 37.5%), Italy (24.6% to 36.8%), Spain (21.1% to 36.1%) and China (14.7% to 30.9%).
6. UN population forecasts are subject to significant uncertainty, particularly around immigration trends
While demographic trends are generally slow moving, these UN projections are subject to considerable uncertainty. This is particularly the case for immigration patterns which will determine population prospects for individual countries, as opposed to the world, as well as global population projections later in the century that will be more influenced by fertility and mortality trends. Our discussion around Australia’s population prospects above highlights the inherent uncertainties around the pace of immigration. Political coups and potential conflicts can also significantly alter the population outlook, both for countries in the midst of the conflict and those who accept the refugees. This is clearly highlighted by the population trends in the Ukraine, where more than 6 million refugees have left the country, with the country’s population declining from 45 million in 2019 to 38 million in 2024 as a result.