Falling Birth Rates Threaten Economic, Climate Goals
- The Earth & I Editorial Team
- 4 days ago
- 2 min read
A recent report by global consulting firm, McKinsey & Company, highlights a concerning demographic trend: Falling fertility rates worldwide are steering major economies toward a potential population decline.
This shift poses significant challenges to achieving net-zero carbon emission goals, as it could stress economies and reduce necessary investments in sustainable infrastructure and research.
"Falling fertility rates are propelling major economies toward population collapse in this century," McKinsey warns, adding that three-fifths of advanced economies, plus China, already have more deaths per year than births. The firm says its research finds sustained economic growth necessary to fund the net-zero transition.
Implications of Shrinking Populations
According to McKinsey, two-thirds of the global population resides in countries with fertility rates below the population replacement rate of 2.1 children per woman of childbearing age. Projections suggest that by 2100, populations in several major economies could decrease by 20% to 50%.
This decline upends economic models that rely on a stable working-age population to support the national economy and its nonworking population, including retirees. Japan and South Korea have been grappling with this demographic decline for years. According to a recent article in The Washington Times (TWT), Japan reported 720,998 births in 2024, “the lowest number of births since Japan started taking the statistics in 1899.”
TWT had somewhat better news for South Korea, reporting that the nation’s birth rate rose in 2024 for the first time in nine years, partially due to an uptick in marriages that had been postponed during the COVID-19 pandemic.
Diverse Perspectives
Not everyone is worried about population declines. While the McKinsey report underscores significant risks, saying "the current calculus of economies cannot support existing income and retirement norms," Axios reports that relief could come from technological advancements and policy interventions.
The publication says that Increased adoption of automation, artificial intelligence (AI), and robotics might offset labor shortages, while policies promoting increased fertility rates, delayed retirement, and increased immigration could help to compensate for demographic challenges.
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