Economic growth is driven in part by people – the more people, the better. And by that measure, Africa is the place to be over the next 30 years.
Humankind is in the midst of the biggest demographic shift in history. For the first time ever, there aren’t enough young people in many countries of the world.
Overall, the number of people over the age of 30 now outnumbers those who are under the age of 30. This means that a key engine of economic growth – a growing workforce – is slowly running out of gas.
But every country has its own unique demographics. And looking at country-level population growth is one indicator of which economies will be swimming against the stream to generate economic growth.
Countries where there will be more elbow room – and less
The Population Reference Bureau (PRB), a non-profit organisation that analyses world demographic trends, estimates that there will be 9.9 billion people on earth by 2050, up from 7.4 billion today, for growth of 34 percent.
The countries where there will be the most competition for a place to sit are all found in Africa. The country with the highest expected population growth is Niger, in West Africa. By 2050, PRB projects it will have almost 250 percent more people than it does today. In Niger, each woman gives birth to over 7 children – the highest fertility rate in the world. The ten countries with the highest expected population growth are all found in Africa.
The U.S., India and Malaysia are all expected to have more people by 2050 with populations 23, 29 and 32 percent bigger, respectively.
Projected Population by Country (Lowest to Highest Growth)
European countries lead the world in population decline, with eight of the ten fastest-declining populations. The worst of the bunch is the eastern European country of Romania, the population of which is expected to fall by 29 percent by 2050. Already-tiny Latvia is right behind it, similarly hurt by low fertility rates and migration.
For Asia it’s a mixed bag. China’s population is expected to fall by 2 percent, or around 30 million people by 2050 (however, its middle class is growing quickly). According to the United Nations, India will pass China as the world’s most populous country by 2022, as India’s population grows by 29 percent to 1.7 billion people in 2050.
Singapore and Hong Kong are expected by the PRB to both post solid population growth. The number of people in Singapore is anticipated to rise by about 1 million, or 18 percent, while there will be 800,000 (11 percent) more people in Hong Kong.
But Singapore and Hong Kong, along with Korea and Taiwan, are tied with Romania for lowest fertility rates in the world, at 1.2 (around one-sixth that of world champion Niger). Japan’s fertility rate of 1.5 is the main cause of its demographic challenges and the cause of an expected 20 percent decline in population by 2050. Fertility in much of Europe is similarly far below the developed world replacement fertility level of 2.1.
More wine and cheese for Europeans
As shown below, the PRB predicts Africa’s population will more than double by 2050, to 2.5 billion. But Europe’s is expected to shrink by 1 percent, to 729 million.
Demographics is a “big picture” trend. It can have a major impact on long-term economic growth – like how the economy will perform over the next few decades, not just the next few years.
So based solely on headcount, Africa looks to have a bright economic future. (The same could have been said a few generations ago – and that potential has been realised only very selectively.)
Europe, by this measure, is in trouble. It’s the only region in the world that will have fewer people by 2050 than it does today. Barring an historic (and unlikely) renaissance in productivity growth, a rapidly shrinking work force will hurt economic growth in Europe.
Population growth alone isn’t a good indicator of future economic growth. Productivity (see here), which measures how much a person, business, or country produces within a certain period, is the other main ingredient to the economic growth equation.
Lower productivity growth hurts profitability, dampens wage growth, and leads to slower improvements in (or a deterioration of) living standards. In recent years, global productivity has been slowing down – and global economic growth along with it.
Immigration – for example, from people-rich Africa – is one potential solution to the many demographic challenges facing Europe and much of Asia. In many countries, though, this has historically been politically untenable. The alternative, is almost inevitable long-term economic decline.
If the high-population growth countries of Africa were to find a way to jump start productivity (and improve the investment environment, among many other factors), the continent would be a hotbed of investment growth. However, history doesn’t offer much hope for that, either.
Demographics are only part of the picture. But they’re one of the most important ingredients that define everything else.