Policy choices will matter crucially amid growing socioeconomic challenges

Demographic shifts pose significant risks to global economic growth and public finances, according to research from UBS Global Research. Rapid population ageing, driven by falling birth rates, is projected to shave up to 2 percentage points off global GDP by 2060 and push pension, healthcare, and long-term care costs up by at least 5% of GDP.

UBS economist Reinhard Cluse warns that depopulation presents a defining megatrend alongside climate change, AI, geopolitical tensions, and soaring public debt. The world's population is expected to peak at around 10.3 billion around 2080 before declining, but national trends differ. Sixty-three countries have already passed peak population, with China's falling by 54% by 2100.

Africa's share of the global population is projected to surge from 19% today to 37% by 2100. This demographic transformation will slash global GDP growth by 1.1 percentage points from 2025-2050 and by 2 percentage points over the longer term, due to shrinking labor forces and lower capital formation. Rising pension, healthcare, and long-term care expenditures, outpacing income tax and social security receipts, will strain sovereign debt and fiscal sustainability.

While AI and immigration may provide partial solutions, the ageing paradox poses political challenges, as older voters often resist reforms to entitlements.