In its most up-to-date World Financial Outlook report, the IMF features a chapter on “The Rise of the Silver Economy: Global Implications of Population Aging” (April 2025).
Listed below are the massive developments in a nutshell. The pink line (measured on the right-hand axis) reveals that the common age of the worldwide poulation was about 27 years again in 1980, is now as much as about 35 years ,and is headed above 40 years in just a few a long time. The blue line reveals common annual inhabitants development. From 1980 to the current, it fell from 1.8% to about 0.8%, and it’s headed towards unfavourable inhabitants development later this century.
Of cousre, this decline in inhabitants development isn’t distributed equally. This determine reveals the timing at which nations begin to expertise a decline within the “working-age” inhabitants, outlined right here as ages 15-64. As you’ll be able to see, Germany, France, Italy, and Japan have been already experiencing a declin in the working-age inhabitants earlier than the yr 2000. Since 2000, the US, Canada, China, Korea, and Brazil have joined the membership. Within the 2030s, India and Indonesia will begin to expertise a declining working-age inhabitants. By later within the century, the sample is projected to succeed in nations throughout Africa, like Nigeria, Ethiopia, Kenya, Ghana, and others.
Does a decline in working-age inhabitants essentially imply a corresponding decline in financial output? Possibly not. There might be extra employees with higher expertise. As well as, individuals appear to be sustaining their cognitive sharpness and bodily well being later in life, which isn’t solely a great factor in and of itself, but in addition will increase the prospect that they are going to proceed contributing to the economic system as employees for just a few years longer. The IMF rreport notes:
Alongside will increase in longevity, the practical capability of older people has improved over time. Newer cohorts of older people are bodily stronger and cognitively abler than earlier cohorts on the similar age. Notably, when cognitive capacities are the main target, “the 70s are the new 50s”: Knowledge from a pattern of 41 superior and rising market economies point out that, on common, an individual who was 70 in 2022 had the identical cognitive skill as a 53-yearold in 2000. Over the course of a decade, this tempo of enchancment in cognitive skills is related to a rise of roughly 20 proportion factors within the chance that people stay engaged within the labor market, both by working or actively looking for employment, together with a rise of about six hours in common weekly hours labored and a 30 p.c rise in labor earnings, conditional on being employed.
Finally,the power of economies to regulate to those demographic shifts will depend on just a few variables: Is there not less than a average upward development within the quantity of people that proceed working after age 65? Are individuals saving extra, in order that they are going to be prepared for longer retirement? Will the abilities of skilled older employees maybe be an particularly good complement with rising AI instruments, thus permitting them to keep up excessive productiveness for longer? Are individuals planning for previous age with out too heavy a reliance on help from the smaller youthful generations of their households? Is the personal sector making the sort of investments in know-how and bodily capital that may elevate the productiveness of older employees? Will the general public sector modify old-age pensions to maintain them solvent? Is a mix of the personal and public sector making the sorts of investments in order that houses, public areas, and care services can be found and accessible to an older inhabitants?
There’s an previous line that “everybody talks about the weather, but nobody does anything about it.” One would possibly say one thing related concerning the monumental development towards international ageing. The IMF report sketches out a mannequin of a future the place numerous changes in labor pressure participation, know-how, funding, and authorities insurance policies helps clean the transition to a “silver economy.” However in lots of nations, for many individuals, I think it will likely be a bumpy journey.
