Demographics considerably impact countries’ economic situation. As analysts at Natixis note, there is a significant gap between the economic vigour of a “young” country and that of a country affected by population ageing.
Population ageing weakens growth
“A decline in the working-age population directly reduces growth. But population ageing also reduces growth through indirect mechanisms: Lower productivity gains if the labour force is old; In the first stage of ageing, a high household savings rate; A reduced need to invest; Declining foreign direct investment.”
“It is not surprising that the economies of ageing countries are less vigorous.”