Peak People

What do you think of when you hear the word population? Ever expanding? Overpopulation perhaps? It seems natural to observe rising rents, low unemployment, shrinking apartments, crowded tourist attractions, supply shortages, or traffic jams in sprawling suburbs and conclude that the world must be bursting at the seams.

I read an interesting book several years ago titled ‘Empty Planet’ by Darrell Bricker and John Ibbitson, which contained a lot of information and trends concerning shrinking populations in the not-so-distant future. This may have seemed a bit alarmist when it was published back in 2019, but a lot of the data may have been conservative. Our blog has touched on this phenomenon, and I thought a check-in might be in order.

Sure enough, globally, birthrates which peaked in the 1950s and 1960s and have been declining since, are still near their recent observed lows, around just 2.2 per woman. According to the UN, ‘the global fertility rate is projected to continue to decline, reaching the replacement level of 2.1 in 2050 and falling further to 1.8 births per woman in 2100.’ Population is thus expected to peak later this century before potentially entering a significant decline.

Even more surprising are some of the data trends when looking at individual countries. Today, fertility levels are at or above 2.1 births per woman in only 45 percent of countries and areas globally, which are home to roughly a third of the global population. The U.S. clocks in at just 1.62, China at 1.02! Looking at the chart below, essentially, the entire developed world is now below replacement level in fertility, some dramatically so, below 1.5. Those in the less developed world, with higher birth rates, share a similar downward trajectory from their loftier numbers, a trajectory already followed by the more developed world.

It is ironic that the rising living standards that we have become accustomed to may have led to falling birth rates and the associated economic conundrums. Without addressing those causes, what are the implications?

 How will we address the funding of social safety nets, healthcare for the poor and elderly, and servicing our ever-growing public debt? Will aging populations be concerned with securing their benefits or addressing climate issues and balancing budgets?

As this plays out over different timelines for different countries, the world will be watching. Will their deficits and debts be sustainable and their currencies stable? What will the impact be on their economic and investment activity?

What might be done to address the situation? Many countries have been prudent in observing this data and taking action. Canada plans to admit 395,000 new permanent residents this year (almost 1% of the current population), with immigrants numbering over 250,000 annually for the last decade. This represents another social experiment with uncertain consequences and mechanics. Can ‘baby bonus’ payments, like some countries are pondering, affect such a massive shift? We have had some baby showers in the office this year, so we’re chipping away on our end, but this will be a very interesting item to watch.

The 30 most populous countries, representing 80% of the global population, ranked by fertility rate/births per woman:

Aaron Jeffries