20May2025|7:52AMEDT

GlobalEconomicsAnalyst

ThePathto2075—ThePositiveStoryofGlobalAging(Daly/Njie/Allen)

nTheglobalpopulationisaging,drivenbyacombinationofincreasedlongevityanddecliningfertility.Thisphenomenonismostpronouncedindeveloped(DM)economies,wherethe‘working-ageratio’(ages15-64)hasalreadydecreasedfrom67%in2000to63%,andisprojectedtofallto57%by2075.Inemergingeconomies,the15-64shareisclosetoapeak(66%)andisexpectedtodeclineto61%overthenext50years.Thisprocessofagingisoftendepictedasa

‘demographictimebomb,’implyingrisingdependencyratios(i.e.,afallintotalemploymentrates)anddecliningGDPpercapita.

nWhileitisrighttofocusontheeconomicimplicationsofatransitionofthis

importance,economistsshouldnotlosesightofthefactthatincreasinglife

expectancyisafundamentallypositivedevelopment.Inadditiontolivinglonger,peoplearealsolivinghealthierlives,inthesensethatthefunctionalcapacityofolderindividualsisimprovingovertime.Accordingtoarecentcomprehensivestudy,apersonwhowas70in2022hadthesamecognitiveabilityasa

53-year-oldin2000.Inaverytangiblesense,70isthenew53.

nItisalsofarfromclearthattheeconomicdrawbacksofpopulationagingareasintractableastheyarecommonlydepicted.Althoughrisingpublicsectorpensioncostsremainaconcernforsomeeconomies,themosteffectivemeansof

counteractingtheimpactofagingondependencyratiosistoextendworkinglives.Fortunately,thistrendisalreadyinmotion:whilemedianexpectedlife

expectancyindevelopedeconomieshasincreasedby5%since2000(from78to82years),themedianeffectiveworkinglifehasrisenby12%(from34to38years)andtheshareofthetotalpopulationinemploymenthasincreasedfrom

46.0%to48.3%.Inotherwords,despitethelargedeclineinDMworking-ageratiosthathasalreadytakenplace,DMdependencyratioshaveactuallyfallen.Thistrendtowardsextendingworkinglivesshowslittlesignofabatingandistakingplaceincountrieswithminimalchangestopensionlaws,suggestinganadaptiveresponsetoincreasedlongevity.

nInaworldwithagrowingnumberofseeminglyintractableproblems–fromclimatechangetoeconomicpopulism–populationagingisonelessthingtoworryabout.Livinglongerreallyisagoodthing.

JanHatzius

+1(212)902-0394|

jan.hatzius@

GoldmanSachs&Co.LLC

JosephBriggs

+1(212)902-2163|

joseph.briggs@

GoldmanSachs&Co.LLC

KevinDaly

+44(20)7774-5908|

kevin.daly@

GoldmanSachsInternational

JohanAllen

+44(20)7774-7122|

johan.allen@

GoldmanSachsInternational

SarahDong

+1(212)357-9741|

sarah.dong@

GoldmanSachs&Co.LLC

MeganPeters

+44(20)7051-2058|

megan.l.peters@

GoldmanSachsInternational

Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.ForRegACcerti?cationandotherimportantdisclosures,seetheDisclosureAppendix,orgoto

/research/hedge.html

.

GoldmanSachsGlobalEconomicsAnalyst

20May20252

ThePathto2075—ThePositiveStoryofGlobalAging

TheWorld’sAgingPopulation

Theworldisgettingolder.Thisprocessismoreadvancedindeveloped(DM)economies,butitisalsotakingplaceinemerging(EM)economies.1Overthepast50years(since

1975),themedianageinDMeconomieshasincreasedfrom30to43yearsandinEMeconomiesfrom19to30.Overthenext50years(to2075),the

UNprojects2

thatthe

medianagewillreach47inDMsand40inEMs

(Exhibit1)

.Assessinghowagingwill

affectthelong-termeconomicoutlookisakeyjudgmentinour

Pathto2075projections

fortheglobaleconomy(seeBox1).

Exhibit1:InthePast50Years,theMedianAgeHasRisenfrom30to43YearsinDMEconomiesandfrom19to30inEMEconomies

MedianAge,Years

55

50

45

40

35

30

25

20

15

MedianAge,Years

MedianAge,Years

Forecast

DM

EM

55

50

45

40

35

30

25

20

15

195019701990201020302050207020902110

Source:UnitedNations,GoldmanSachsGlobalInvestmentResearch

Globalpopulationagingisaconsequenceoftwodemographicdevelopments:

1.IncreasedLongevity

Peoplearelivinglonger,healthierlives.Overthepast50years,averagegloballife

expectancyhasrisenfrom62to75years,withdevelopedeconomiesseeingan

increasefrom72to82yearsandemergingeconomiesfrom58to73years.Thistrendis

1Weusethestandard?nancialmarketclassi?cationforDMeconomies.Ourclassi?cationofEMeconomiesincludesallcountriesnotincludedintheDMgroup–i.e.,wedonotdistinguishbetween‘emerging’,

‘developing’and‘frontier’economies.ThecountriesinthisbroadEMgroupaccountforalargemajorityoftheglobalpopulation(currently87%)butamuchsmallershareofglobalGDP(40%,atmarketexchangerates).

2Theseprojectionsaremadein

WorldPopulationProspects,

whichisabiennialreportfromtheUnitedNationspresentinghistoricaldemographicdatastartingfrom1950,aswellasprojections(until2100inthelatestreport)for237countriesorregions.ThemostrecentreportwaspublishedinJuly2024.

GoldmanSachsGlobalEconomicsAnalyst

20May20253

notuniversal–USlifeexpectancyhasdeclinedslightlyinthepastdecade–but,ata

globallevel,itshowsnosignsofslowing.

Exhibit2

illustratestheprogressionoflife

expectancyinthelongevity‘frontier’–i.e.,thecountrywiththelongestlifeexpectancyatdifferentpointsintime.In1925,Australiahadthehighestlifeexpectancyat63years;in1975,Icelandledwith75years;andtoday,HongKongholdstherecordat86years.3

Lifeexpectancyinthelongevity‘frontier’hasfollowedabroadlylineartrend–risingbyaround0.25yearsperyear–formorethan150years.Thistrendhascontinually

surpassedpredictionsofapotential‘ceiling’tothehumanlifespan.Averagegloballife

expectancyhasbeenrisingalittlefasterthanthis–atarateof0.32yearsperyearsince

1950–asaresultofconvergenceovertimetothefrontier.

Exhibit2:LivingLonger–LifeExpectancyContinuestoChartaLinearPathHigher

Leadingcountrylifeexpectancy(maleandfemale),basedon‘periodlifeexpectancy’method

95

90

85

80

75

70

65

60

95

Years

Years

90

HKJP

HK

85

JP

80

IS

NO

SE

SE

NL

75

IS

NO

70

NL

AUSE

NL

AU

65

NLAU

NO

DK

AU

SE

SE

ISDK

60

DK

AU

55

55

NO

IS

SE

NO

SE

SE

NO

SE

50

45

50

NONO

IS

SENO

UNForecasts

DK

45

185018601870188018901900191019201930194019501960197019801990200020102020203020402050

Source:OurWorldinData,UnitedNations,GoldmanSachsGlobalInvestmentResearch

Theselifeexpectancydataalmostcertainlyunderstatetheactualincreaseinlongevity.Thisisbecausethelifeexpectancydatathataremostcommonlycitedaren’treallylifeexpectancydataatall–theyareameasureoftheaverageagesthatpeoplearedyingattoday.Thisonlyprovidesanaccuratepictureoflifeexpectancyifweassumetherewillbenoimprovementsinlongevityinthefuture,whichhasconsistentlyprovedtobeanexcessivelypessimisticassumption.4

3Thelifeexpectancy?gureswequotearefortotalpopulation(menandwomen).Lifeexpectancyistypicallyhigheronaverageforwomenthanformen,althoughthegendergapinlifeexpectancyhasbeendeclining

overtimeinbothdevelopedandemergingeconomies.

4Thestandardmethodforreportinglifeexpectancydataisbasedonthe‘periodlifeexpectancy’approach,

20May20254

Thus,whenwestatethattheaveragelifeexpectancyindevelopedeconomiesis

currently82years,weareessentiallysayingthatanaverageindividualborn82yearsagoin1943wouldlivetobe82.However,in1943,theof?ciallifeexpectancyfordevelopedeconomieswas21yearslowerthanitistoday,atonly61years.OnlytimewilltellhowlonganaveragepersonborninaDMcountrytodaywilllive.But,inalikelybest-case

scenario,whereweextrapolatethelineartrendthathasbeenunderwayinthefrontierforthepast150years,theaveragepersonborntodaywouldliveto110yearsratherthan82years.5

70isthenew53:Inadditiontolivinglonger,peoplearealsolivinghealthierlives,inthesensethatthefunctionalcapacityofolderindividualsisimprovingovertime.Arecent

IMFstudy,usingmicro-dataofindividualsaged50+(includingphysicalandcognitive

tests)fromasampleof41developedandemergingeconomies,foundthat“onaverage,apersonwhowas70in2022hadthesamecognitiveabilityasa53-year-oldin2000”,

whilethephysicalfrailtyofa70-year-oldcorrespondedtothatofa56-year-oldin2000.6Measuredinyears,theseimprovementsarelargerthanthereportedincreasesinlifeexpectancy,emphasizingtheneedtofocusonbiologicalratherthanchronologicalage.

Thefactthatwearenotonlylivinglongerbutalsoslowingtheprocessofaging

throughoutourlivesraisesanimportanteconomicpoint.Moststudiesoftheeconomicconsequencesofagingimplicitlyorexplicitlyassumethatincreasesinlifeexpectancywillextendtheamountofourlivesthatwespendin‘oldage’,keepingeverythingelse?xed.Oneimplicationthatfollowsfromthisassumptionisthattherewillbeahigher

demandforgoodsandservicestailoredto‘oldpeople’.However,amoreaccuratedescriptionisthatweareextendingthedurationofallstagesoflife–‘young’,

‘middle-aged’,and‘old’–whichmakesitlesscertainthatdemandwillshifttowardsproductsandservicesfor‘old’people.7

2.DecliningFertility

Thesecondkeydemographicdevelopmentdrivingpopulationagingisdecliningfertility.Theglobalfertilityrate–theestimatednumberofbirthsawomanwillhaveinher

lifetimebasedoncurrentbirthrates–peakedat5.4in1963,droppedto4.1in1975,andcurrentlystandsat2.1

(Exhibit3)

.GlobalfertilityhasfallenfasterthantheUNprojectedoverthelast5-10years,promptingarevisionofprojectedfertilityrates.Whetherthis

whichcalculatestheaveragenumberofyearsapersoncanexpecttolivebasedonthecurrentmortalityratesataspeci?cpointintime.‘Cohortlifeexpectancy’estimates,ontheotherhand,aimtoaccountforfuture

changesinmortality.While‘cohortlifeexpectancy’estimatesareinherentlysubjective,theytendtoofferamorerealisticassessmentthanforecaststhatassumezerofutureimprovementinmortalityrates.

5Thisrepresentsalikely‘bestcase’scenariobecauseasigni?cantportionoftheincreaseinlifeexpectancyoverthepast150yearscanbeattributedtothereductionofearly-lifemortalityratherthanextendingthe

upperlimitofhumanlifespan.Giventhehighratesofsurvivaltooldageindevelopedcountries,thepotentialforfurthergainsofthistypeismorelimited.Thisimpliesaprobableslowdownintherateofincreasein

longevityinthefrontierovertime.SeeAshwinandScott(2025).

6Theseresultsarebasedonanempiricalanalysisusingalmostonemillionobservationsforindividualsaged50-90in29advancedeconomies(AEs)and12emergingmarketeconomies(EMs)during2000–22.Physicalandcognitiveabilitiesarecomparedovertime,havingcontrolledfordifferencesinotherco-variates,includingsocioeconomiccharacteristics(suchaseducationandwealth)andcross-countryeffects.SeeIMF(2025),‘TheRiseoftheSilverEconomy:GlobalImplicationsofPopulationAging.’

7Thedistinctionbetweenfocusingontheimplicationsofan‘a(chǎn)gingeconomy’anda‘longevityeconomy’isonethatisemphasizedbyScott(2023).

GoldmanSachsGlobalEconomicsAnalyst

20May20255

declinewillbepartlyreversedorwhethertheCOVID-19pandemichascausedapermanentadjustmentinfertilityremainstobeseen.

Exhibit3:TheGlobalFertilityRateHasFallenfromaPeakof5.4in1963to2.1in2024

Fertilityrate(estimatedlifetimebirthsperwoman)

5

4

3

2

1

FertilityRateFertilityRate

Actual

UNForecast,2024

UNForecasts,Previous

UNForecast,LowFertilityScenario

ReplacementRate(FixedLifeExpectancy)

ReplacementRate(RisingLifeExpectancy)*

5

4

3

2

1

19501960197019801990200020102020203020402050206020702080

*Thisassumesthatlifeexpectancyrisesinlinewiththe‘frontier’trend(0.25yearsperyear).

Source:UnitedNations,GoldmanSachsGlobalInvestmentResearch

Contrarytothecommonperception,thelargestdeclinesinfertilityaretakingplaceinrelativelypoorcountrieswherebirthratesarehighest.Since1975,theEMfertilityratehasdeclinedfrom4.6to2.2,andinDMeconomiesithasdeclinedfrom1.9to1.5

(Exhibit4)

.

GoldmanSachsGlobalEconomicsAnalyst

20May20256

Exhibit4:TheDeclineinFertilityRatesHasBeenGreatestinEMEconomies,WhileDMFertilityHasBeenBelowthe‘ReplacementRate’(AssumingFixedLifeExpectancy)forMorethan50Years

Fertilityrate(estimatedlifetimebirthsperwoman)

6

5

4

3

2

1

FertilityRate

FertilityRate

EM

DM

ReplacementRate(FixedLifeExpectancy)ReplacementRate(RisingLifeExpectancy)*

6

5

4

3

2

1

195019601970198019902000201020202030

*Thisassumesthatlifeexpectancyrisesinlinewiththe‘frontier’trend(0.25yearsperyear).

Source:UnitedNations,GoldmanSachsGlobalInvestmentResearch

Thecurrentglobalfertilityrateof2.1alignswiththecommonlyquotedreplacement

fertilityraterequiredforlong-termpopulationstability.8However,incommonwiththe

standardlifeexpectancydata,thiscalculationassumesthatmortalityratesare?xedatcurrentlevels.If,instead,lifeexpectancyincreasesovertime,thefertilityrateneededtobalancethenumberofbirthswiththenumberofdeathsissigni?cantlylower.If

longevityrisesatapaceof0.25yearsperyear–i.e.,inlinewiththe‘frontier’trendbutlowerthanthelong-termriseingloballifeexpectancy(0.32yearsperyear)–the

replacementfertilityratedropstoaround1.6-1.7.9ThishelpstoexplainwhyDM

populationgrowthhasremainedsigni?cantlypositiveinaggregate,despitetotalfertilityrunningbelowthe2.1thresholdformorethan50years.10

Nevertheless,asaresultofthedownwardrevisionstoprojectedfertility–anddespitetheoffsettingpositivesurprisestoprojectedlifeexpectancy–theUNhasstartedto

8Toreplacethemselves(assuming?xedmortalityrates),women,onaverage,needtohaveonefemalechildwhosurviveslongenoughtohaveafemalegrandchild.Thereasonthisreplacementrateis2.1rather2.0is(i)notallwomenwilllivetotheendoftheirreproductiveageand(ii)thesexratioatbirthisusuallyaround105

malesbornforevery100females.Incountrieswithhighearly-lifemortalityratesorwheretherearemorethan1.05malesbornforeveryfemale,the?xed-mortalityreplacementrateishigherthan2.1.

9Increasinglifeexpectancyresultsina‘drift’inmortality,whichreducesthenumberofdeathsperyear

relativetoapopulationwith?xedlifeexpectancy.Allelseequal,a0.25peryearincreaseinlifeexpectancywillreducethenumberofdeathsperyearby1/(1+0.25)relativetoapopulationwhoselifeexpectancyis?xed,

reducingthereplacementratefrom2.1toaround1.6-1.7.Giventhatgloballifeexpectancyhasbeenrisingatafasterratethanthis(0.32peryear),thefertilityratethathashistoricallycorrespondedtozeropopulation

growthhasbeenevenlower,ataround1.5-1.6.

10ImmigrationfromEMshasalsocontributedtoDMpopulationgrowthbut,evenexcludingimmigration,DMpopulationgrowthwouldhavebeenpositiveoverthepast50years,despiteanaveragefertilityratethathasconsistentlybeenwellbelow2.1.

GoldmanSachsGlobalEconomicsAnalyst

20May20257

loweritsprojectionsforthepeakglobalpopulation.In2017,theUNexpectedtheglobalpopulationtoincreasefrom8.2billioncurrentlytomorethan11billionbytheendofthiscenturyandforitstilltobeonanupwardtrajectory.However,initslatestprojections,

theUNnowexpectstheglobalpopulationtopeakatapproximately10.3billioninaround50years’time

(Exhibit5)

.

Thispointisworthemphasizing.Despitethefallinfertility,theglobalpopulationisstillprojectedtorisesigni?cantlyfromcurrentlevelsanditwillcontinuetoriseforthenext50years.EvenintheUN’slowfertilityscenario–whichassumesthatfertilityrates

continuetofallfromcurrentlevels–theglobalpopulationisexpectedtogrowforanother25years,peakingataround9billion.11

Exhibit5:TheProjectedPeakinGlobalPopulationHasDeclinedDuetoLowerFertilityBut,EvenUnderaLowFertilityAssumption,theWorld’sPopulationWillRisefromAround8bnto9bnin2050

UNglobalpopulationprojections,variousvintages

12

11

10

9

8

7

6

bn

bn

UNForecast

2017Projection

2019Projection

2022Projection

2024Projection

2024LowProjection

12

11

10

9

8

7

6

2000201020202030204020502060207020802090210021102120

Source:UnitedNations,GoldmanSachsGlobalInvestmentResearch

Thedeclineinglobalfertilityandtheresultingslowdowninglobalpopulationgrowthishavingavarietyofdifferenteffects.Whetherthisisviewedpositivelyornegatively

dependsonhowtheseeffectsareweighed.Untilrecently,themorecommonconcernrelatedtotheunsustainabilityofglobalpopulationgrowthandtherisksthatthisposedtoresourceutilizationandclimatechange.12Nowthatweareseeingthedeclinesin

fertilitythatwillhelptostabilizetheglobalpopulation,anincreasingnumberofanalysts

11TheUNpopulationprojectionsalsoassumeaveryslowincreaseinlifeexpectancy,whichhasconsistentlybeenexceededbyreality.Iflifeexpectancycontinuestosurprisetotheupside,thisimpliesupsideriskstoitspopulationprojections.

12ConcernsovertheimplicationsofpopulationgrowthdatebacktoThomasMalthus(1798).Malthusarguedthatexponentialpopulationgrowth,combinedwithlineargrowthinfoodsupplyandotherresources,wouldresultinaMalthusianTrapandpopulationdecline.Atthetimeofwriting,theglobalpopulationisestimatedtohavebeenaround1billionpeople.Malthuswaswrongbecausegrowthinfoodsupplyandotherresources

alsoprovedtobeexponential.However,whileglobalfoodsupplyhasmorethanmatchedpopulationgrowthtodate,therearelimitsontheextenttowhichthisislikelytobetrueinthefutureandtherehavebeena

numberofmorerecentstudieswarningoftheconsequencesofcontinuedglobalpopulationgrowth(see,forexample,Ehrlich(1968)orBrown(2012)).

GoldmanSachsGlobalEconomicsAnalyst

20May20258

worryabouttheimplicationsofdecliningfertilityforglobalpopulationandgrowth

prospects.13Betweenthesetwoperspectivesliesanoptimalglobalpopulationpro?lethatis‘justright’.However,thedeterminationofthispathisinherentlysubjective.

Whetheroneviewstheimplicationsofdecliningglobalfertilityasabenigndevelopmentornot,thisdoesnotdiminishthechallengesfacedbycountrieswithextremelylow

fertilityrates(suchaspartsofAsiaandEasternEurope)orextremelyhighfertilityrates(suchaspartsofSub-SaharanAfrica).Internationalmigrationcanhelpaddressthe

economicchallengesthatcross-countryvariationsinfertilitypresent,butitincreasinglyfacespoliticalopposition.

AGlobal‘DemographicTimeBomb’

Beforefocusingontheeconomiceffectsofpopulationaging,itisimportantto

acknowledgethemechanicaleffectthatdecliningpopulationgrowthishavingon

headlineGDPgrowthrates(aswediscussedindetailinour

Pathto2075projections)

.Insimpleterms,GDPisaproductofthenumberofpeopleinemploymentandtheamountofoutputeachproduces,so,ifthegrowthrateinthenumberofpeoplefalls,thegrowthrateofGDPwillalsodecline.Globalpopulationgrowthpeakedataround2%peryear50yearsago,iscurrentlyrunningat1%peryear,andisprojectedtofalltozerooverthe

next50years,sotheslowdowninpopulationgrowthhascontributedandwillcontinuetocontributetoslowerGDPgrowthforsometime

(Exhibit6)

.

Exhibit6:TheGrowthRateoftheWorld’s‘WorkingAge’(15-64)PopulationIsProjectedtoSlowfrom+2.5%yoyin1980to-0.2%yoyin2075

Totalpopulationandworking-agepopulation(15-64)growth(%,yoy)

3

3Global

Forecast

2

2

1

1

0

0

-1

-1

1950197019902010203020502070

3

3DM

WorkingAgeRatio

2

PopulationGrowth2

WorkingAgePopulationGrowth

Forecast

1

1

0

0

-1

-1

1950197019902010203020502070

3EM

Forecast

2

1

0

-1

1950197019902010203020502070

3

2

1

0

-1

Source:UnitedNations,GoldmanSachsGlobalInvestmentResearch

13Fernández-Villaverde(2021)isanotableproponentofthemorenegativeinterpretationofdecliningfertilitytrends.Ourviewismorebenignthanhisonthispointfortworeasons:?rst,hedoesnotadjustthe

replacementrateforincreasesinlongevity;second,hetakesamorepessimisticviewofthelikelytrajectoryoffuturefertility,arguingthatcountrieswherefertilityisexceptionallylowrepresentalikelytemplatefortherestoftheworld.Nevertheless,evenonthisbasis,hestillexpectstheglobalpopulationtocontinuegrowinguntil‘between2050and2060’.

GoldmanSachsGlobalEconomicsAnalyst

20May20259

However,policytypicallyfocusesonmaximizingGDPperpersonratherthanoverall

GDP–asGDPdifferencesduetopopulationalonearetypicallyviewedasneutralfor

economicwelfare–andtheanxietyoverpopulationagingisdistinctfromtheeffectthatslowerpopulationgrowthishavingonheadlineGDPgrowth.Themainworryisthatanagingpopulationwillresultinadeclineinthe‘working-ageratio’(theproportionof

individualsaged15to64)asmorepeoplereachretirementage,ultimatelyloweringtotalemploymentratesandGDPperperson.14

TheDMworking-ageratiohasalreadydeclinedsigni?cantly.Itremainedcloseto67%

from1985untiltheearly2000s,buthassincedroppedto63%andisprojectedtofallto57%by2075

(Exhibit7)

.Ifoneassumesthatemploymentrisesandfallsona

one-for-onebasiswithchangesintheworking-ageratio,thedeclineintheworking-ageratiothathastakenplaceshouldalreadyhaveloweredemploymentandGDPpercapitaby6%inDMeconomiessince2000anditwillloweremploymentandGDPpercapitabyafurther10%overthenext50years(representingapeak-to-troughdeclineof

15%).15

Inemergingeconomies,the15-64populationratioiscurrentlynearingitsprojected

peakof66%andisexpectedtodeclineto61%overthenext50years.ThismeansthatEMe