Stories
India Must Boost Productivity to Counter Aging Population: Moody's Ratings
- •Emerging markets like India must prioritize productivity gains over population growth to sustain economic expansion, as demographic tailwinds weaken, according to Moody's Ratings.
- •Falling fertility rates mean fewer workers and consumers in the future, making productivity crucial for maintaining growth and living standards.
- •India, though still relatively young, faces a shifting age structure with fertility already below replacement levels, setting the stage for an older population later this century.
- •Automation, AI, and increased investment in education and skilling are vital to raise output per worker and compensate for a slower-growing or shrinking workforce.
- •Emerging markets are aging faster than advanced economies, with India expected to transition from an ‘aged’ to a ‘super-aged’ population in about 16 years, significantly faster than many developed countries.
Key Questions Answered
Countries like India must rely on productivity gains rather than population growth because falling fertility and aging populations are weakening traditional demographic tailwinds, leading to fewer workers and consumers in the future and making productivity vital for maintaining economic growth and living standards.
Moody’s estimates that India will take approximately 16 years to transition from an 'aged' population, where 14 percent of people are 65 or older, to a 'super-aged' population with a 21 percent share.
Economies can leverage automation, artificial intelligence, and greater investments in education and skilling to raise output per worker. Additionally, countries can supplement productivity by increasing labor-force participation through higher female participation and longer working lives.
