Historically, the global population has been rapidly growing every year. However, for the first time in 250 years, we may witness a shrink in the number of people living on our planet. The fertility rates are now collapsing, and different countries around the globe are experiencing ageing populations.
This crisis is causing real alarm, leading to various governments putting together plans to restore the birth rates. This article will discuss the reasons behind and the economic consequences of this phenomenon.
Fertility Rates Around the Globe
The global fertility rates of the last couple of decades are showing a concerning drop. In 2000, we saw 2.7 births per woman globally, while the “replacement rate” was around 2.1 people.
The latter has remained stable, however, the former today is at 2.3 births per woman and continuing to decrease. The top 15 largest populations by GDP are already experiencing fertility rates lower than the “replacement rates”, however, once the global rates reach this stage we, as a population, will be officially shrinking.
The issue is seen in both rich and developing countries. For instance, Italy and Japan have been prime examples of ageing societies for a while now, but even populations in Thailand, Mexico and Brazil are now starting to rapidly age, as the old die but are not replaced.
Japan is experiencing record lows, as their fertility rates drop for the 7th year in a row, while Italy is only receiving 7 births for every 12 deaths. One of the largest economies in the world, the US, is also raising concerns, as 35 of the states are now home to fewer children than they were 5 years ago.
As both Europe and Asia are developing plans to restore the fertility rates through parental financial support schemes and other initiatives, the only continent that continues to grow is Africa. Out of the top 32 countries with the highest birth rates, 31 to one of them are in Africa. Niger is by far the highest, holding a substantial rate of 6.9 births per woman.
Why Is Our Population Decreasing?
There are a number of different reasons behind the drop in fertility rates we are seeing globally. One of the most prevalent reasons is the ever-growing cost of living. With the increased housing prices and costs of other goods, people are simply struggling to afford to have a family.
This is particularly evident in richer countries with higher urbanization rates, where people choose to live in larger, more expensive cities. Therefore, to be able to live comfortably, the majority of families are choosing to have few or no children.
Another substantial reasons for the collapse of global fertility is changed societal norms and values. With the increased accessibility of education, people are now favouring their academic and professional development as opposed to having families. This also explains why African countries are continuing to grow in population, since education and contraceptives are much less accessible to women than, perhaps, in first-world countries.
We are seeing late pregnancies (at the age of 30+) much more frequently now, as women are increasingly participating in the workforce and prioritising their careers. All in all, there is a cultural shift amongst the younger generations who are moving away from large families and, instead, desire smaller families or child-free lifestyles all together.
How Do Shrinking Fertility Rates Impact Our Economy?
The opinions on the impact of lower fertility rates on the economy are divided. On one side, environmentalists believe that this is the best thing to happen in terms of fighting climate change.
They argue that the planet is running low on resources, unable to provide for our growing population. Fewer people on our planet means less demand for energy and resources globally, which will help fight climate change more efficiently.
On the other hand, there are serious concerns over the economic consequences this will have. Our current economic model is based on continuous growth, and so when the growth slows down, we are likely to start seeing such issues as labour shortage, lower productivity, and decreased innovation.
Ageing populations will lead to later retirements, government budget crises, higher taxes to support our pensioners and even lower returns for savers. In fact, such an economic shift may have a significant impact for those that are futures trading with Plus500 – particularly, those with longer-term trading techniques. Futures trading already bears high risks, and this is further exacerbated with fundamental changes in our economy.
In conclusion, the decrease in fertility rates has been expected for decades now, however, the sheer speed of it across many nations is now causing serious worries. Although the opinions on the impacts of this issue may be somewhat divided, it is clear that the world is about to see a radical shift in economy which will undoubtedly affect each of us.
