Demographic momentum, roughly understood as a population’s ability to grow its economy over generations, is a key determinant for forecasting economic progress. For instance, the continent of Africa has mostly positive demographic momentum because the average age of the population is very young and can be expected to produce more and more wealth in the coming decades. Germany, in contrast, has poor momentum because it has experienced population loss and has a more elderly population on average.

Straight Arrow News contributor Peter Zeihan explains how demographic momentum works and then looks at the age demographics of Europe, Asia, Africa and beyond to imagine how different major economies might evolve in the decades ahead.

Below is an excerpt from Peter’s March 21 “Zeihan on Geopolitics” newsletter:

We tend to overlook the dynamics of demography and its economic impact, so let’s take a step back and break down demographics by generation and how that will dictate the future of our economies.

There are standard behaviors for each age group. You’re born as a ward, but are cheap to take care of. Then you start to become more productive and consume a lot. Then you age into a situation where you’re providing taxes. And then you revert back to your old ways and become a leech on the economy again. Fairly cyclical and predictable.

So in rapidly aging populations like Europe, Korea, Japan and parts of Africa, once you tip that scale towards people consuming more capital than they are producing…you can imagine how well that plays out. There are certain situations where population shifts could benefit an economy, but there’s no silver lining to deep population decline.