Some of the world's wealthiest economies will need to at least double their productivity growth to maintain historical living standards amid a sharp decline in birth rates.
This is stated in a report by consulting firm McKinsey, which focuses on the economic consequences of declining birth rates, as reported by the Financial Times.
Countries with the best and worst pension systems have been namedThe pension system in the Netherlands has been recognized as the best in the world according to Mercer CFA Institute. The three worst countries are India, Argentina, and the Philippines.The study indicates that in the UK, Germany, Japan, and the USA, labor productivity must grow twice as fast as it has over the past decade to maintain the same living standards observed since the 1990s.
At the same time, in Italy and France, productivity growth needs to triple over the next three decades to match GDP per capita growth from 1997 to 2023. In Spain, it must quadruple from now until 2050.
The decline in birth rates will have a significant impact on the most prosperous economies, making them vulnerable to a shrinking share of the working-age population.
"If no action is taken, young people will inherit lower economic growth and bear the costs of supporting a larger number of retirees, while the traditional flow of wealth between generations will be disrupted," commented Bradley, director of the McKinsey Global Institute.
McKinsey estimated that in Western Europe, the decline in the share of the working-age population could lead to a decrease in GDP per capita by an average of $10,000 per person over the next quarter-century.
It is worth noting that birth rates in England and Wales have fallen to their lowest level since records began in 1938. The number of children born in the European Union in 2023 also reached a record low.
Ukraine is one of the countries with the lowest birth rates in the world.
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