Slowing population growth opens window for faster economic growth

As the Philippines’ population growth rate has drastically slowed down, the country now has a window of opportunity to experience faster economic growth, as the working population makes up a larger share of the total population, according to an expert.

“We have an opportunity to experience an economic growth that we have not seen before or could not have imagined,” said Jose “Oying” G. Rimon II, founding director of the William H. Gates Sr. Institute for Population and Reproductive Health at Johns Hopkins University’s Bloomberg School of Public Health. He said at the sidelines of the National Population, Health and Environment Conference.

“This will happen if we do the right policies and the right investment. The right investment must be in education and in health,” Mr. Rimon added.

According to the Philippine Statistics Authority (PSA), the country’s population growth rate (PGR) slowed to 0.8% annually between 2020 and 2024, from 1.63% in the 2015–2020 period.

Mr. Rimon said the lower population growth rate could lead to a decline in the young dependent population (aged 14 and below) and an increase in the working-age population, which could further support economic growth, a trend referred to as the demographic dividend.

According to the Philippine Statistics Authority (PSA), the share of the working-age population rose by one percentage point to 64% in 2020 from 63% in 2015, while the proportion of the young dependent population declined to 31% from 32% over the same period.

Meanwhile, the ASEAN+3 Macroeconomic Research Office (AMRO) said the Philippines recorded the third-fastest average growth in its working-age population at 2.27%, behind Malaysia (2.41%) and Laos (2.39%).

Mr. Rimon said the demographic dividend in the Philippines is expected to last for about 25 years—a period the government must maximize, as neighboring countries like China, Singapore, and Malaysia achieved significant growth during similar windows.

To maximize this window of opportunity, he said the government must invest in quality education, particularly by strengthening the country’s technical-vocational programs and specialized schools, especially those focused on technology.

He also emphasized the need for smoother internship programs for emerging talents.

To further expand the country’s universal healthcare access, Mr. Rimon said the Philippines could also check how government health insurance systems operate abroad.

To further expand the country’s universal healthcare access, Mr. Rimon said the Philippines could also study how government health insurance systems operate abroad. He added that the government must also ensure the health and well-being of the young dependent population.

Source: Business World

How Global Trade Is Shifting as the World’s Population Ages

A demographic alarm bell is ringing in Japan, where the birthrate fell last year to its lowest point in recorded history. The sharp drop in births from the previous year marks the eighth consecutive year of decline. Former Prime Minister Fumio Kishida labeled this demographic crisis Japan’s greatest challenge. But this is more than just Japan’s story.

The world is aging, fast. As it does, global trade will shift in unexpected ways. Japan offers a preview of what much of the world will soon face, as economies everywhere start to see record-low birthrates. South Korea recently recorded the lowest birthrate globally, while Italy hasn’t seen an increase in births since 2008. And this is no longer just a challenge for wealthy, industrialized countries.

In Latin America and South Asia, the population ages 65 and older is quickly rising. Life expectancy is rising even as fewer people are being born. The result: Nearly 1 in 4 people worldwide will be 65 or older by century’s end. That shift could reshape the world in ways we’re only beginning to understand.

Countries are scrambling to adapt to the financial strain of aging populations.

Germany has raised the retirement age, a move echoed across Europe. Greece has introduced a controversial six-day workweek, while China, reversing its one-child policy, now urges families to have three children. Japan is turning to automation to fill the gaps left by retiring workers, and is bringing in more migrant workers.

Amid these shifts, Africa’s youthful population remains a demographic outlier, with over half of its population younger than 25 years old. As economies age, they may experience a decline in overall production and consumption. With fewer workers available, production is likely to move away from labor-intensive to more capital-intensive industries, making capital productivity crucial for sustaining output and growth.

The “consumption- retirement puzzle” adds uncertainty to consumption patterns. While traditional theories suggest consumption remains steady throughout life, in reality, some retirees may spend less due to insufficient savings, shifting their focus to essentials. In aging economies, consumption is moving toward goods and services that cater to an older population. Industrial equipment, transport, and work-related expenditures are giving way to increased spending on healthcare and other essentials for seniors.

In Japan, for example, demand for strollers and baby diapers has plummeted while demand for adult diapers has surged. Similar patterns are emerging globally. In China, spending on medical care and food is rising, while expenditures on transportation, household durables, and recreation are declining with age.

Simulations done by economists Sagiri Kitao and Tomoaki Yamada for Japan through 2050 suggest consumption will fall across the board as the population continues to age, with nondurable goods declining the slowest. The U.S. and Singapore are following a similar trajectory, reflecting a broader global realignment in consumption driven by demographic changes.

As populations age, changes in consumption and labor supply will reshape the structure of global trade, though the full impact isn’t yet understood and depends on the import content of consumption. Some studies hint that older economies might altogether trade less, focusing instead on more capital-intensive goods, while the aging workforce may change the skills used in producing traded commodities. Impacts on trade composition, however, remain an open question. Industrial and durable goods are among the top import and export categories globally.

We can expect these categories to shrink as work-related expenditures decline. Similarly, as birthrates fall and fewer children are born, the global market for toys, infant products, and sports equipment may contract. Such imports are already declining in countries with a higher average age, such as Japan. However, these trends are suggestive, as reduced imports could potentially be offset by increased domestic production.

Conversely, we can anticipate an increase in the trade of services, particularly in areas like healthcare and eldercare. Medical services, provided remotely or through medical tourism, will likely become a more significant component of global trade. Japan’s digital health industry is already growing fast. Its telemedicine market is expected to reach $404.5 million by 2025 (due to “shortages in medical specialists”), and broader healthcare IT, including wearable tech and online monitoring, is projected to hit $16 billion.

The changing demographics suggest a major transformation in global trade. And as the goods and services exchanged shift, there will be opportunities for countries to change their standing in global trade. For younger, less industrialized African economies, the challenge is to leverage their demographic advantage and pivot toward sectors that can thrive in a world less reliant on industrial goods.

Traditional paths to higher-income status, like export-driven industrialization, may lose their effectiveness in an aging global economy with diminishing demand for such products. Wealthier nations will need to delay retirements, rely on migrant labor, and invest in technology to sustain productivity.

Developing nations with aging populations face challenges without access to new technologies, potentially relying on older workers for longer. Addressing this demographic shift will deeply affect markets, production, and trade. It will also demand unprecedented global coordination to ensure that the world can produce and afford what it needs, with no one—and not a single country—left behind.

Source: Barrons

Climate Change Is Putting Swelling Cities at Risk

Weather events exacerbated by climate change will threaten many places in the coming years, and many of these locations are also projected to gain a lot of new inhabitants.

In the world’s largest cities, governments will have to do more to protect the millions of people in danger from a hot planet.

Growing Exposure

Countries with surging urban populations are also the most vulnerable to climate change.

Sources: Notre Dame Global Adaptation Initiative, UN-Habitat

Note: Color indicates climate vulnerability (red = highest). Countries without ND-GAIN index scores or negative projected urban population growth not shown

• Drought has edged Mexico City close to “Day Zero,” when it would run out of water.

• Phoenix has a director of heat response and mitigation whose department runs, among other things, a tree-planting program to provide shade.

• Cairo’s $390 million Abu Rawash wastewater treatment plant is one of the world’s largest. Almost 60% of city adaptation funding goes to water and waste.

• Jakarta is the fastest-sinking megacity in the world. If managers don’t stop groundwater withdrawals, the subsidence, coupled with sea level rise, will spell doom.

• About 90% of domestic migrants to Niamey, the capital of Niger, cited climate change as their reason for moving in a 2021 United Nations survey.

• India and Bangladesh are home to three of the world’s 10 most populous cities. Yet they receive only 6% of all urban financing.

• Ten Philippine cities have a disaster insurance pool to help them cope with increasingly severe typhoons.

Source: Bloomberg