The 2029 tipping point: Western populations are about to start shrinking, piling pressure on public finances
Moody's predicts that the world's aging populations will have fundamental impacts on the global economy and lead to difficult policy decisions.
TL;DR
- Western populations are aging, and the EU's is projected to peak by 2029, followed by a decline.
- Moody's states that fiscal pressures from aging appear long before population decline.
- The ratio of working-age people to those over 65 is decreasing, pressuring growth and public finances, including healthcare.
- Aging populations lead to slower economic growth, increased pension and care costs, changed consumer demand, and shifts in interest rates.
- Fewer workers limit productive capacity, while fewer consumers weaken demand, requiring greater reliance on productivity for growth.
- AI and productivity increases can only partially offset the challenges as robots do not consume.
- Emerging economies like China, Brazil, Thailand, and Turkiye are also aging rapidly and will face these costs at lower income levels.