By Feodora @Adobe Stock

Falling fertility rates are causing population declines in many countries, with more deaths than births in some regions. This shift leads to a shrinking workforce and an aging population, particularly in advanced economies and China. McKinsey’s report, led by Anu Madgavkar, Marc Canal Noguer, Chris Bradley, Olivia White, Sven Smit, and TJ Radigan, highlights that current economic systems, built on growing populations, must adapt. They write:

Today in more than half of the world’s countries, home to two-thirds of humanity, the fertility rate has dropped below the replacement rate of 2.1 children per woman. Globally, the fertility rate averaged 2.3 children per woman in 2023, just over the replacement rate. Over the past quarter century, the fertility rate has declined in 90 percent of the world’s countries.

Total Fertility Rate Map by Country

By Korakys at Wiki

At the same time, life expectancy has increased almost everywhere. But greater longevity explains just 20 percent of the change in the age profiles of populations in developed countries since 1960; falling fertility rates explain the rest. […]

Due to the demographic shifts we’ve described, what demographers call population pyramids are shaped less and less like pyramids today. To analyze how population structures are shifting over time, we’ve grouped the world’s countries into ten regions: Advanced Asia, Central and Eastern Europe, Emerging Asia, Greater China, India, Latin America and the Caribbean, Middle East and North Africa, North America, Sub-Saharan Africa, and Western Europe (for more on our classification and data, see sidebar “Pyramid foundations: Demystifying the approach”). In most regions, these structures now resemble shallots, and in more economically advanced ones, they are taking on the shape of obelisks. […]

Working-age people account for the bulk of economic output, so their numbers relative to those of older and younger people determine a host of economic outcomes. All regions will see the share of working-age people in their populations decline, although at different paces and points in time. First wave regions are those already undergoing this change. Later wave regions, where the shift is just beginning to take hold or hasn’t yet arrived, will experience a peak and subsequent decline in the share of working-age population in the future—in some cases, the near future.

Among first wave regions are predominantly developed economies—Advanced Asia, Central and Eastern Europe, North America, and Western Europe—and Greater China, which has lower GDP per capita than other first wave regions but shares their demographic characteristics. These regions have an average total fertility rate of 1.2 children per woman today, and 67 percent of their combined population is working age, down from a high of 70 percent in 2010 (Exhibit 4). In aggregate, this cohort is rapidly shrinking in these regions, where the share of the working-age population is projected to drop to about 59 percent by 2050. […]

The uncertainties of demographic change will persist for decades, and societies will need to wrestle with them. Meanwhile, the world will need to learn to live with the change, at least in the short term, and policy makers and civil society will need to inform and guide choices that society at large must make over the coming half century.

Read more here.