Global birth rate fell 4.5% in 2023, will 'come at a cost'

03/22/2024 23:01

According to HSBC Global Research, birth rates fell 4.5% last year from 2022. HSBC Global Economist James Pomeroy joins the Live show to discuss the economic consequences of a decreasing global population. From the aggregate size of GDPs and economic growth rates to labor market supply, the world's declining demographic outlook will impose many challenges, Pomeroy explains: "You're probably talking 0.3, 0.4 percentage points per year in terms of GDP growth difference between a good birth rate scenario and bad birthrate scenario, and it looks like we're going down a bad birth rate scenario." While a smaller global population may create less demand for natural resources and ease housing shortages, but a misshapen population pyramid, with fewer young people and far more retirees, will come at a cost, Pomeroy says: "We're going to have to think seriously about how we fund things used disproportionately by older populations." With a smaller labor force and weaker per capita growth, governments will still be stuck with a "very large bill to pay" as debt continues to accumulate. Pension services and healthcare systems may require new funding models, and migration will be critical to plugging gaps in the labor market. For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live. Editor's note: This article was written by Gabriel Roy.

From the aggregate size of GDPs and economic growth rates to labor market supply, the world's declining demographic outlook will impose many challenges, Pomeroy explains: "You're probably talking 0.3, 0.4 percentage points per year in terms of GDP growth difference between a good birth rate scenario and bad birthrate scenario, and it looks like we're going down a bad birth rate scenario."

While a smaller global population may create less demand for natural resources and ease housing shortages, but a misshapen population pyramid, with fewer young people and far more retirees, will come at a cost, Pomeroy says: "We're going to have to think seriously about how we fund things used disproportionately by older populations."

With a smaller labor force and weaker per capita growth, governments will still be stuck with a "very large bill to pay" as debt continues to accumulate. Pension services and healthcare systems may require new funding models, and migration will be critical to plugging gaps in the labor market.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Gabriel Roy.