Northern Trust believes that a shrinking working-age population and a rising proportion of elderly people are limiting growth potential and driving economies to increase investment in AI and productivity-enhancing technologies.
Signs of aging are everywhere: many major global markets are experiencing overall population aging, a trend that will profoundly impact economic performance in the coming years. The challenges posed by an aging population are not new. As early as the 1980s, when the baby boomers reached their peak productivity, demographers warned of the serious challenges this large group would pose decades later. Among the many variables influencing future prospects, demographics are among the most predictable.
With declining fertility rates, the proportion of the population above the conventional retirement age is also rising. The labor force in many countries is shrinking. Beyond population size, older populations tend to be more risk-averse, have lower entrepreneurial and innovative intentions, and are slower to adopt new technologies. All these factors make maintaining economic growth more difficult.
Historically, immigration has helped fill demographic gaps, but today, in many parts of the world, immigration has become a contentious issue. Unable to sustain their population sizes, countries urgently need to increase productivity. This explains why many countries around the world are investing heavily in artificial intelligence.
