With the world population more than doubling from 3.035 billion people in 1960 to today’s global population of approximately 7.347 billion, and with UN projections estimating a global population of 9.7 billion by 2050, there has been much rhetoric and concern over the social, environmental, and economic impact of this growth. Many of the fastest growing nations in the world have gone as far as implementing government policies and programs aimed at stemming this rapid growth, the most notable of which was the Chinese one-child policy, which was introduced in 1978 and began to be phased out only last year. While there is no questioning the legitimacy and seriousness of the issues caused by rapid population growth, there is also a myriad of other issues, equal in severity, that stem from the fact that the world population is not growing fast enough, particularly in developed nations. The focus of this article will be on the latter set of population growth issues, those which can be linked to the insufficient population growth.

2.1 is the magic number. That is the fertility rate, or births per woman, according to the OECD, that is required to ensure a stable population. The issue is that the vast majority of the developed world is considerably below that benchmark. According to Ruchir Sharma, the head of emerging markets and global macro at Morgan Stanley, in 83 countries, which control roughly half of the total world population, the fertility rate is below two. (A comprehensive map and listing of countries by fertility rate can be viewed on globalEDGE by clicking here.)

A direct result of low fertility rates across the globe is a sharp decline in global population growth. Global population growth, which was consistently above 2% for much of the 1960’s and the early 1970’s, peaking around 2.1%, is now down almost an entire percentage point to 1.18% in 2015, according to The World Bank.

These two statistics undeniably demonstrate that the population growth of most developed economies will begin to decrease, if they have not done so already. This should not come as news to any demographer. The trillion dollar question is rather: what impact will this deceleration in population growth have on the global economy?

The short answer is that the outlook is not overly promising. One of the major impacts will be the consequential decrease in working age population. This, by definition, will lead to a decrease in GDP and potential for recession, unless there is an offsetting increase in the productivity of the workforce.

In addition, more people will begin to leave the workforce than will enter it, which begs the question, how will the increased number of retirees be supported by a shrinking number of workers (another trillion dollar question). To make matters worse, from strictly an economics standpoint, rapid advancements in healthcare over the past half century have led to a dramatic increase life expectancy, especially in the high income countries, which have the lowest fertility and population growth rates. Currently the life expectancy at age 65 in high income countries is just below 85 and is expected to grow continually. This means that not only will a reduced workforce have to support and increased pool of retirees, but they will have to do so for an increased period of time.

Another pessimistic statistic to further complicate and magnify this issue is that there is a 15 year lag period until a fertility rate effects the economy. The working age population is defined as those ages 15-64, so inherently, it will take 15 years for a baby born today, under all time low fertility statistics, to have an impact on the size of the counties workforce. This means that the trend of decreasing workforce sizes is likely to continue, at least for the next couple of decades.

Despite the pessimistic nature of these statistics, the world is not doomed. There is a promising solution that can help mitigate this looming crisis, and it comes in the form of immigrants and refugees. According to the UN Refugee Agency there are 65.3 million forcibly displaced people worldwide, consisting of 21.3 million refugees, of which over half are under the age of 18. These refugees, especially the younger ones, could provide a crucial influx in the workforce of many developed nations. While many nations who are facing the issues associated with a shrinking workforce are, in fact, welcoming hundreds of thousands of immigrants and refugees, that number would still need to increase to entirely mitigate the issue. In 2015, Germany welcomed 1.1 million refugees, but according to Mr. Sharma, of Morgan Stanley, Germany would have to welcome approximately 1.5 million migrants every year for the next 15 years in order to maintain their balance between working age adults to retirees.