The Economic Upside of Global Ageing

Archive edition · Market data and company circumstances reflect 24 May 2025, when this newsletter was sent.

Ageing Nations, Thriving Markets?

If you’ve followed the headlines about demographic trends, you’ve likely heard terms like “population time bomb” or “demographic crisis” thrown around to describe our ageing global population. But what if this widely feared phenomenon isn’t a looming catastrophe after all? What if, in fact, it’s one of the most positive economic stories of our time?

A recent report by Goldman Sachs has turned conventional wisdom on its head, offering a refreshingly optimistic take on how societies are adapting — and even thriving — as lifespans lengthen and birth rates decline.

The World Is Ageing — and That’s Not Bad

Median age rose from 30 to 43 in developed, and 19 to 30 in emerging markets over 50 years.

Global population ageing is primarily driven by two powerful forces:

Since 1975, average global life expectancy has climbed from 62 to 75 years. In developed (DM) economies, it has risen from 72 to 82 years, while emerging markets (EM) have seen an increase from 58 to 73 years. This trend has persisted for over a century and shows no signs of slowing.

Interestingly, longevity gains have defied past predictions of a ‘ceiling’ on human lifespan. In fact, if the linear upward trend continues, a child born today in a DM economy could reasonably expect to live to 110 — far surpassing today’s life expectancy figures.

Declining Fertility Rates

Global fertility rates have dropped sharply over the past 60 years, falling from 5.4 births per woman in 1963 to 2.1 in 2024 — right at the so-called replacement rate threshold.

Fertility rates have fallen fastest in emerging markets, from 4.6 in 1975 to 2.2 now. Developed markets have long operated below replacement levels, currently averaging around 1.5 births per woman.

The United Nations has recently revised its population projections downward as a result. While it once expected global population to peak beyond 11 billion by 2100, its latest forecast puts the peak at around 10.3 billion by 2075.

Slower, But More Sustainable

The world’s working-age population growth is set to go to -0.2% by 2075.

At first glance, lower population growth might seem concerning for economic growth, since GDP is fundamentally a function of the number of people working and how much they produce.

Global population growth, which peaked at about 2% per year in the 1970s, has slowed to 1% today and is projected to approach zero by 2075.

This will naturally contribute to slower headline GDP growth rates — but that doesn’t necessarily spell economic decline.

Crucially, economic wellbeing is better measured by GDP per capita, not total GDP. And here’s where the Goldman Sachs report highlights an important, often overlooked point: People are not just living longer, they’re living healthier, more productive lives.

Healthier Ageing: 70 is the New 53

A standout insight from the report comes from an IMF study showing that a 70-year-old in 2022 had the same cognitive ability as a 53-year-old in 2000. Similarly, physical frailty has also been postponed — meaning many older adults remain capable and active for far longer than previous generations.

This means that economic models based on rigid age brackets for ‘working-age’ populations (15-64 years) and ‘old age’ are increasingly outdated. As life expectancy extends, so too does the duration of each life stage — including time in the workforce.

Rather than expecting societies to buckle under the weight of rising dependency ratios, we are witnessing a natural, adaptive extension of working lives.

How Economies Are Adapting

Goldman Sachs' data shows that in developed markets, the average effective working life increased from 34 years in 2000 to 38 years in 2024 — a 12% rise that has more than offset the demographic headwinds.

Remarkably, this shift has occurred with minimal changes to pension legislation, implying a voluntary, market-driven adaptation to longer life expectancy. The share of the total population in employment has actually risen in many DM economies over the past 25 years, despite a declining working-age ratio.

The Role of Gender & Technology

Two other forces have played a crucial supporting role in this transition:

• Higher Female Labor Force Participation: Greater inclusion of women in the workforce, particularly after childbirth, has extended effective working lives and offset demographic pressures. While gains in DM economies have plateaued in recent years, there remains significant upside potential in emerging markets.
• Decline of Manual Labor: As economies shift toward services and knowledge-based industries, fewer jobs require physically demanding work, allowing people to work later in life without the same health burdens.

What This Means for Investors?

Rather than triggering economic collapse, global ageing appears to be reshaping economies in ways that could enhance long-term productivity:

• Higher GDP per Capita: As effective working lives lengthen and people stay productive for longer, GDP per person will remain resilient, even if total population growth slows.
• Opportunity for AI and Automation: Technologies like AI and robotics will increasingly support ageing populations, especially in elder care, healthcare, and labor-intensive industries.
• Changing Consumer Markets: Demand for products and services may shift away from traditional ‘senior’ products toward a broader longevity economy — wellness, education, travel, and financial services for active, healthier older adults.

The 2075 Global Economy

According to Goldman Sachs, long-range projections point to a gradual global growth slowdown, with worldwide GDP growth easing from an average of 3.2% in the 2010s to around 1.7% by the 2070s.

While overall growth is expected to decelerate, emerging markets are projected to continue outpacing developed markets — posting an average 1.9% annual GDP growth by 2075, compared to 1.1% for advanced economies. The key driver? Younger, more dynamic demographic profiles in emerging economies.

In terms of global economic rankings, Goldman Sachs expects China to surpass the U.S. as the world’s largest economy by 2035, driven by sheer scale, despite facing its own demographic challenges.

Over the longer term, India is forecast to catch up with both economies by 2075, positioning itself as a major global economic power, thanks in large part to its favorable demographic outlook and expanding working-age population.

Interestingly, despite being overtaken in overall GDP size, the U.S. is projected to maintain stronger per-capita growth compared to China over the long run. This is largely attributed to its comparatively better demographic profile, higher productivity growth, and sustained innovation capacity, which should help the U.S. economy remain resilient and prosperous on a per-person basis even as global demographics shift.

Archive note

This article preserves the analysis in our weekly newsletter sent 24 May 2025. Market prices, forecasts and company circumstances reflect the time of publication and may have changed.

This material is general information, not personal financial advice or a recommendation to trade. Investing and trading involve risk, including loss of capital.