When you sit in a government office in Tokyo on any given afternoon, you’ll notice that the average age of the room is significantly higher than in comparable offices in Berlin or Chicago, and there’s a certain texture to the quiet: experienced staff handling tasks that younger employees would typically absorb. It’s not overt. But if you look, you can find it everywhere. For decades, Japan has been aging in plain sight, and the government has essentially watched it happen in the same way that you watch a slow leak that you’ve been meaning to fix: aware, a little worried, but never quite urgent enough to take action.
In 1974, Japan’s fertility rate fell below the replacement level of 2.1. That was more than fifty years ago. By 2008, the population had actually begun to decline. However, the response in the areas of labor market restructuring, immigration policy, and pension reform has been so insufficient that Jun Saito, a senior research fellow at the Japan Center for Economic Research, now speaks of GDP growth approaching zero with the tone of someone describing something that has essentially already happened rather than something that is being warned about. “The potential GDP growth rate is eventually going to zero, and it could even fall below zero,” he stated earlier this year in an interview with Dan Pontefract of Forbes in Tokyo. That isn’t a projection with a lot of conditions attached. That is a researcher who has given up hedging and spent his entire career observing the numbers.
| Field | Details |
|---|---|
| Topic | Global Demographic Decline — Falling Fertility, Aging Populations, and Economic Consequences |
| Global Scope | Two-thirds of humanity now lives in countries with fertility rates below the 2.1 replacement level (McKinsey Global Institute, 2025) |
| South Korea Fertility Rate | 0.7 children per woman — officially one of the lowest ever recorded in modern history; population declining faster than any comparable economy |
| Japan’s Fertility Warning | Japan’s fertility rate fell below 2.1 replacement level in 1974 — over 50 years ago. Population decline began by 2008. GDP growth now approaching zero. |
| Italy’s Position | Over 23% of Italy’s population was already above age 65 in 2019 — one of the highest elder-population ratios in the world alongside Japan |
| Projected Population Loss | By 2100, populations in some major economies could fall by 20–50% based on current UN projections |
| Working-Age Population Forecast | Share of working-age people in advanced economies and China to fall from 67% today to 59% by 2050 |
| GDP Per Capita Impact | Annual GDP per capita growth could slow by 0.4–0.8% in first-wave aging countries from 2023–2050, unless productivity doubles or triples |
| Pension System Stress | Retirement systems may need to channel up to 50% of labor income to fund senior consumption — a ratio no modern economy has ever sustained |
| Only Exception | Sub-Saharan Africa remains the sole major world region still experiencing meaningful population growth through this century |
If anything, the situation in South Korea is worse. Its fertility rate has dropped to 0.7 children per woman, which is so far below replacement that demographers can honestly use terms like “unprecedented” to describe it. It’s not just that South Korea isn’t replacing its population at 0.7. If there isn’t a significant change in policy, the population could be cut in half in a few generations. Italy is comparable, with an elderly population that surpassed 23% of the country’s total population in 2019 and has continued to rise. These three nations—Italy, South Korea, and Japan—are occasionally cited as singular examples influenced by distinct cultural elements. The more accurate way to put it is that they are just further along a path that the majority of the developed world is silently following.
When you look at the global figures, which were compiled by McKinsey’s Global Institute in early 2025, they have a certain significance. Nowadays, two-thirds of the world’s population resides in nations where fertility is below replacement. According to current UN estimates, some major economies may see population declines of 20 to 50 percent by 2100. By 2050, the proportion of working-age individuals in China and advanced economies is predicted to drop from 67% to 59%.
This seemingly small change will actually result in fewer workers supporting a much higher number of retirees, with pension systems that were created for an entirely different demographic reality. According to McKinsey’s modelers, retirement systems might eventually have to use up to 50% of all labor income simply to cover the difference between seniors’ earnings and their consumption. That is not how any modern economy has ever attempted to function.
The fact that none of this is new information makes it especially annoying to watch. In the early 1970s, fertility rates fell below replacement in every G7 nation. This data has been available for fifty years in every government that has a statistics office. The Super Age author Bradley Schurman put it bluntly: the current labor shortage is “the result of over 100 years of demographic change.” The choices that led to the current crisis were made—or not made—by long-retired individuals who were receiving the very pensions that are currently in jeopardy.
It’s still unclear if any government, keeping a close eye on South Korea, Italy, and Japan, will take significant action or just keep raising awareness without taking any concrete steps. There are levers, such as increased productivity investment, revised retirement ages, serious immigration policy, and fertility support programs, but none of them are politically simple, and they all require a time horizon that is challenging to adhere to during election cycles. As this develops, it seems like everyone is aware of what is about to happen and is struggling to decide what to do about it.