McKinsey Releases Report on Demographic Transition and Depopulation
McKinsey has released a report titled "Dependency and Depopulation? Confronting the Consequences of a New Demographic Reality," which offers a comparative analysis of the demographic dynamics in both first-wave (developed) and later-wave (developing) countries.
Key Highlights of the Demographic Transition:
Depopulation: Two-thirds of the global population now resides in countries with fertility rates below the replacement level of 2.1 children per family.
Age Structure Changes: Populations are shifting from a pyramid structure to an obelisk shape, as the number of older individuals increases and the number of younger people declines.
Population Decline by 2100: Some major economies are expected to see their populations decrease by 20%-50% by 2100, according to the UN.
Falling Support Ratios: The support ratio is decreasing from 6.5 today to 3.9 by 2050. The support ratio refers to the number of people aged 15-64 (working age) relative to those aged 65 and above.
Pressure on Retirement Systems: In advanced economies and China, retirement systems may need to allocate 50% of labor income to cover the rising gap between the consumption and income of seniors.
India’s Diminishing Demographic Dividend:
India has 33 years to leverage its demographic dividend before reaching support ratios similar to those of developed countries. Currently, this dividend adds 0.7 percentage points annually to GDP per capita growth. However, by 2050, it will shrink to just 0.2 percentage points per year.
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