Credit rating agency Moody's has warned that as Western countries experience population aging, a shrinking labor force and rising costs will put pressure on public finances. The European Commission predicts that the EU's population will peak as early as 2029, "after which a sustained long-term decline will begin." The US Census Bureau projects that the US population will not peak until 2080, and under a low-immigration scenario, it will peak in 2043. If immigration is excluded, the US population decline has already begun. However, Moody's states that the fiscal pressures of population aging will manifest long before the population actually begins to shrink. Olivier Semura, Vice President of Credit Strategy and Standards at Moody's, said that population aging will affect the economy through multiple channels, including slower economic growth, increased pressure on public finances from pension and care costs, changes in consumer demand, and fluctuations in real interest rates and sovereign bond yields.
Shemra also stated that AI and productivity gains can only partially offset the long-term challenges posed by an aging workforce, "because while you can certainly replace and enhance the economy's supply capacity, whether in factories or services, robots do not consume, so there will still be a gap on the demand side, which will slow economic growth."
