By Phapano Phasha
THE United States, China, Germany and Japan which are the four largest economies in the world, are facing record-low fertility rates, rapid ageing population and changing consumption patterns.
For many pundits, this demographic shift will also be charectarised by a total shift in economic and political power dynamics, with the balance of forces tilting towards the Global South.
This impending shift is not only unique to the four mentioned major economies but the majority—if not all developed economies—and has subsequently created a lot of panic and a lot of conspiracy theories especially among conservatives who see this dynamic as an existential threat compounded by a growing trend of right-wing politics and “pronatalism” across Europe and the US.
The question Is whether countries in the Global South will leverage on its youthful demographic dividend to transform its economies. One country in the Global South that is envisaged to leverage on its population explosion by a litany of economic research institutes is India.
In a recent 2025 study by the economic and business research institute, McKinsey Global Institute (MGI), titled Dependency and Depopulation: Confronting the Consequences of a New Demographic Reality stated: “Global consumption at purchasing power parity will exponentially shift towards India, sub-Saharan Africa, and Latin America as a result of fast-increasing youthful demographic and increasing incomes.”
The report elucidates further: “By 2050, India will account for 16% of global consumption at purchasing power parity ‘only’ behind North America, with a 17% share in 2050.” However, the paper also states that despite very fast progress, India is still a low-income country, so it needs to “get rich before it gets old”.
Crossing the replacement fertility threshold has been an issue that Advanced Asia, Europe, and North America has been battling with and unable to resolve hence the world is now looking at India which is the largest populated nation in the world whether sub-Saharan Africa or at least Nigeria can catch-up is a mystery.
In summary the MGI report states that:
- Falling fertility rates are propelling major economies toward population collapse in this century. Two-thirds of humanity lives in countries with fertility below the replacement rate of 2.1 children per family. By 2100, populations in some major economies will fall by 20 to 50 percent, based on UN projections.
- Age structures are inverting—from pyramids to obelisks—as the number of older people grows and the number of younger people shrinks. The first wave of this demographic shift is hitting advanced economies and China, where the share of people of working age will fall to 59 percent in 2050, from 67 percent today. Later waves will engulf younger regions within one or two generations. Sub-Saharan Africa is the only exception.
- Consumers and workers will be older and increasingly in the developing world. Seniors will account for one-quarter of global consumption by 2050, double their share in 1997. Developing countries will provide a growing share of global labor supply and of consumption, making their productivity and prosperity vital for global growth.
- The current calculus of economies cannot support existing income and retirement norms—something must give. In first wave countries across advanced economies and China, GDP per capita growth could slow by 0.4 percent annually on average from 2023 to 2050, and up to 0.8 percent in some countries, unless productivity growth increases by two to four times or people work one to five hours more per week. Retirement systems might need to channel as much as 50 percent of labour income to fund a 1.5-time increase in the gap between the aggregate consumption and income of seniors. Later wave countries, take note.
- In confronting the consequences of demographic change, societies enter uncharted waters. Absent action, younger people will inherit lower economic growth and shoulder the cost of more retirees, while the traditional flow of wealth between generations erodes. Long-standing work practices and the social contract must change. More fundamentally, countries will need to raise fertility rates to avert depopulation—a societal shift without precedent in modern history.
- The age of youth scarcity. Even though Sub-Saharan Africa’s fertility rate is falling fast, almost 300 of the world’s next thousand babies will be born there. Nigeria alone will become home to 57 of the next thousand—or five more than the 52 born across Central, Eastern, and Western Europe combined. Similarly, 172 of the next thousand babies the stork delivers will be in India, where the birth rate overall has dropped below replacement but where the current population of women of childbearing age is still high. By contrast, Greater China’s share of the global population, today the second largest among the ten regions, will shrink by two-thirds, from 18 percent in 2023 to 6 percent by 2100. This would make Greater China’s population only 170 million larger than North America’s, according to UN estimates, compared with a difference of roughly one billion people today.
- The shift in consumption pools from North America and Western Europe to Emerging Asia and India is inevitable. This shift has important implications for many businesses in the Global North and Global South alike as they develop and scale products to serve growing markets. As income and consumption grow in India and emerging Asia, local and multinational companies will need to determine how to best meet changing local tastes and adapt their products and services accordingly. Affordability may increase in importance as consumers in these countries present a bigger market opportunity for businesses. Navigating as a business may become more complex, as many countries in the global south have more challenging legal and governance environments and are more conflict prone.
This consistency in consumption patterns of countries in the Global South especially India is consistent with another MGI research report on India titled The Bird of Gold: The Rise of India’s Consumer Market. This report that was written 18 years ago correctly predicted and posited India as an emerging and major global consumer market and judging from the rise of the Indian Middle Class India continue to surpass global expectations.
Equally the title of the 2025 research paper by McKinsey Global Institute Dependency and Depopulation; Confronting the Consequences of a New Demographic Reality is quite revealing and interesting because it paints a level of discomfort and urgency by the authors, of the supposed threat of the ageing Global North and Advanced Asia. And the concrete objective reality that developed economies will be heavily dependent on India and even Africa for its workforce and economic growth.
* Phapano Phasha is with the Centre for Alternative Political and Economic Thought, with a focus on The Global South and BRICS Plus Countries. The views expressed here are her own.
** The views expressed here do not necessarily reflect those of the Sunday Independent and IOL.