Australia warns of risks from ageing population, falling birth rates

Australia anticipates a demographic shift in the 2060s, where deaths will surpass births for the first time in the nation's history, according to a recent Intergenerational Report published by the Treasury department. This development, a result of slowing immigration and declining birth rates, poses significant challenges for an economy grappling with an aging population and shifts towards a service-based economy.

The report highlights five transformative forces affecting Australia's economic outlook: artificial intelligence, geopolitical fragmentation, the energy transition, an aging population, and the transition to a service-based economy. Population growth is projected to slow to 0.9% annually over the next four decades, down from an average of 1.4% over the past 40 years, as fertility rates decline and net overseas migration continues to fall before stabilizing.

Australia's population will age more rapidly and grow more slowly than previously projected, the Treasury noted. Deaths are expected to outnumber births in the 2060s, marking the first time this demographic shift has been forecast in an Intergenerational Report. As natural increase ceases to drive population growth, the aging population will intensify demand for care services, particularly in regions with older demographics.

This shift could exacerbate labor shortages in healthcare and aged care sectors, which heavily rely on migrant workers.