DEMOGRAPHIC CHANGE AND

ECONOMIC GROWTH WITH FOCUS ON THE BRICS

Philip Schellekens (Lead Economist, DEC Prospects Group)

With thanks to: Syud Amer Ahmed, Pinyi Chen, Marcio Cruz and Bryce Quillin

Historical data: a positive association between demographic change

and per capita GDP growth

1

-4

-2

0

2

4

6

8

-10 0 10 20 30Ave

rag

e a

nn

ua

l ch

an

ge

in

re

al G

DP

p

er

ca

pita

, 1

96

0-2

014

Change in the share of the working-age population, 1960-2014

Source: Global Monitoring Report 2015/2016.

Note: A rising working-age population share is positively correlated with GDP per capita growth.

An increase of 1 percentage point in the working-age population share is estimated to boost GDP per

capita by 1.5 percentage points, on average.

Simulations into 2030: a differentiated impact according to

demographic type

2

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

Pre-dividend Early-dividend Late-dividend Post-dividend World

A. Average change in the share of working age

population, 2015-30 (percentage points)B. Average GDP per capita (annualized)

growth, 2015–30 (percentage points)

Source: Global Monitoring Report 2015/2016.

0.8 0.5

-0.2 -0.6 -0.3

2.2 3.2 4.2

2.0 2.3

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

Pre-dividend Early-dividend Late-dividend Post-dividend World

Other sources of growthImpact of Demographic Change

Aggregate GDP growth: non-trivial effects

3

Average aggregate GDP (annualized) growth, 2015–30 (percentage points)

Source: Global Monitoring Report 2015/2016.

0.9 0.3 -0.6 -0.5 -0.4

6.0

4.74.6

1.93.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

Pre-dividend Early-dividend Late-dividend Post-dividend World

Impact of Demographic Change Other sources of growth

Emerging markets have shown a persistent growth differential

during the 2000s, but this has started to fade in strength

4

EM‐AE growth differential

-2

0

2

4

6

8

1990

1995

2000

2005

2010

2015

Pe

rce

nta

ge

po

ints

Source: World Bank Global Economic Prospects (GEP), IMF World Economic Outlook (WEO),

Consensus Forecasts, World Bank, Haver Analytics.

Note: Difference between weighted average EM growth and weighted average AE growth.

The BRICS have accounted for a significant share of EM performance

5

Source: World Bank, IMF World Economic Outlook, World Development Indicators.

Note: A. Each column shows the period weighted average of the share of global output contributed

by each group denoted. 1990s average starts in 1992. Data for 2015 are forecasts. B. The columns

denote the percent contribution of each group to global growth over the periods denoted. Data for

2015 are forecasts. GDP is measured by constant 2010 US dollars.

1114

20

9

10

12

4

4

5

0

10

20

30

40

1990s 2000-08 2010-15

Pe

rce

nt

BRICS

Non-BRICS EM

FM

13

3543

13

15

18

2

7

6

0

20

40

60

80

1990s 2000-08 2010-15

Pe

rce

nt

BRICS

Non-BRICS EM

FM

A. Share of world output B. Contribution to world growth

The recent performance of the BRICS has been marked by cyclical

weakness compounded by a structural slowdown

6

Source: World Bank (2015).

Note: Unweighted averages.

0

2

4

6

8

10

122

00

0

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

Potential growth Actual growth

Actual and potential real GDP growth: BRICS, 2000-14

Looking ahead, BRICS potential growth is expected to be

dampened further by decelerating population growth….

0

1

2

3

4

19

50

19

60

19

70

19

80

19

90

20

00

20

10

20

20

20

30

20

40

20

50

A. BRICS (total) population

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

19

50

19

60

19

70

19

80

19

90

20

00

20

10

20

20

20

30

20

40

20

50

B. BRICS population growth

Billions of people Annual population growth rate, percent

5

Source: World Population Prospects (2015)

… a declining working age population share and rapid aging

C. Share of working age population in BRICS D. Share of elderly and children population in BRICS

Share of population, aged 15–64, percent Share of population, percent

40

50

60

70

80

19

50

19

60

19

70

19

80

19

90

20

00

20

10

20

20

20

30

20

40

20

50

0

5

10

15

20

25

30

35

40

45

50

1950

1960

1970

1980

1990

2000

2010

2020

2030

2040

2050

Ages 0-14 Ages 65+

Source: World Population Prospects (2015).

The BRICS share in the global working age population is falling and

the their share in the global elderly population is rising rapidly

5

20

25

30

35

40

45

50

19

50

19

60

19

70

19

80

19

90

20

00

20

10

20

20

20

30

20

40

20

50

20

25

30

35

40

45

50

1950

1960

1970

1980

1990

2000

2010

2020

2030

2040

2050

Ages 0-14 Ages 65+

E. BRICS share of global working age population F. BRICS share of global elderly and children population

Share in global population, aged 15–64, percent Share in global population, percent

Source: World Population Prospects (2015).

Examining the heterogeneity across BRICS, significant demographic

differences are notable

10

Source: Global Monitoring Report 2015/2016.

Average change in the share of working age population (percentage points)

0.320.27

0.11

0.32

0.40

0.30

-0.11

0.06

-0.41

0.15

-0.35

0.13

-0.5

-0.4

-0.3

-0.2

-0.1

0

0.1

0.2

0.3

0.4

0.5

BRICS BRA RUS IND CHN ZAF

2000-2014 2015-2030

Thus, the impact of demographic change will be felt differently

11

Average aggregate GDP (annualized)

growth, 2015–30 (percentage points)

Source: Global Monitoring Report 2015/2016

0.2 -0.5 0.3 -0.8

1.9

0.7

6.6

5.6

-2

0

2

4

6

8

Brazil Russia India China

Other sources of growth

Impact of Demographic Change

0.2 -0.50.3 -0.8

1.0 1.6

5.3 6.2

-2

0

2

4

6

8

Brazil Russia India China

Other sources of growth

Impact of Demographic Change

Average per capita GDP (annualized) growth,

2015–30 (percentage points)

Some concluding observations

• Demographics has played a key role in driving

convergence between advanced and emerging

economies

• And as demographic trends in many EM evolve,

growth prospects slow, including in many BRICS

• Though BRICS growth may be slowing,

demographics is neither a blessing nor curse:

policies matter

GMR 2015/201612

Thank You!

Global Monitoring Report 2015/2016

www.worldbank.org/gmr

13

Additional slides

GMR 2015/201614

The slowdown in BRICS growth has been driven by external and

domestic factors

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2010:1

2010:2

2010:3

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2011:1

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2011:3

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2013:1

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2013:3

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2014:1

2014:2

2014:3

2014:4

2015:1

2015:2

perc

enta

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ts

External Internal

External and domestic drives of real GDP growth in BRICS (percentage

points), Q1 2010 – Q1 2015

Source: World Bank (2015).

Note: Based on a Bayesian vector autoregression estimation using data for 1998:1 to 2015:2. Each bar shows the percentage

point deviation of growth from the sample mean. In estimates for China, its growth is not separately included as an external factor.

Unweighted average contribution to BRICS growth, including China.

Since the global financial crisis, the sources of the BRICS slow

down has been broad-based

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4

6

8

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12

2011 2012 2013 2014

Perc

ent

Private Consumption Investment

Government Consumption Exports

Imports Real GDP

Contributions to real GDP growth in the BRICS, 2011-14 (%)

Source: World Bank (2015).

Where are the next “BRICS”?

17

Cha

nge

in th

e s

ha

re o

f glo

ba

l p

op

ula

tion

(pe

rcen

tage p

oin

ts)

Change in the share of global GDP (international 2011 PPP)

(percentage points)

PANOMN

LBNCRISGP

JORLAO

PNG ISR

ARE

DOMBOL

TCDZMB

GTM

MLIBFAGHA

MOZ

NPL

MYS

SSTUZB

SAU

PER

IRQ

UGA

SDN

COL

TZA

TURIRN

EGY

ETH

PHL BGD

NGA

PAK

IDN

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

0.6%

0.7%

0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.7% 0.8%

18

A. Advanced economies B. Emerging market economies

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2001-07 2008-14

Perc

ent

Demographic factors

Others

Potential output growth

0

1

2

3

4

5

6

7

8

2001-07 2008-14

Perc

ent

Demographic factors

Others

Potential output growth

Demographic factors made a substantial contribution to potential

growth in advanced and emerging market economies during 2000-

07, though this has fallen since the 2008 global crisis

Contribution of demographics on potential growth

Source: World Economic Outlook April 2015

Note: Growth is calculated using purchasing power parity weights.

Demographic change may contribute to a larger share of India and

South Africa on global GDP

19 GMR 2015/2016

Share on the global GDP (international $, 2011 PPP)

Sh

are

of th

e W

ork

ing

ag

e p

op

ula

tio

n in

20

15

(pe

rce

nta

ge

po

ints

)

BRA

RUS

IND

CHN

ZAF

64

66

68

70

72

74

76

0 5 10 15 20

The pace of urbanization is also slowing as some countries

20

Urban population as share of total (percent)

Urbanization in BRICS economies in 1990, 2000, and 2014

Source: World Development Indicators

0

10

20

30

40

50

60

70

80

90

Brazil China India Russia South Africa

1990 2000 2014