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Pandemic leads to ‘baby bust’ as births decline in most countries

Economic growth

A year ago, many were suggesting the lockdowns might produce a “baby boom” as couples spent more time together. But early data suggests the world is instead seeing a “baby bust”. As Nikkei Asia reports:

“Births (in December/January) have fallen between 10% and 20% in such countries as Japan, France and Spain — and even more in some areas – exacerbating a widespread downward trend in fertility. This has sparked concern about whether these economies will be able to grow and maintain their social safety nets should the declines continue.”

And as the Wall Street Journal reports, working mothers have been particularly impacted by the pandemic, as they have often taken on the majority of home schooling responsibilities:

“After a brutal year of layoffs, parenting struggles, and juggling jobs and schooling under one roof, many working mothers are trying to regain their career momentum—and hitting new obstacles.”

The pandemic is acting as a catalyst, accelerating existing paradigm shifts:

  • Global fertility rates were around 5 babies per woman in the 1950s/60s, but have since halved to 2.45
  • As a result, total births have plateaued at 140m, even though the global population has risen from 2.5bn in 1950 to 7.8bn today

The trend is most advanced in the world’s major economies, where fertility rates now average just 1.64. It is nearly 50 years since they were last above the 2.1 replacement level in 1973.

Most major economies today now have ageing populations. And the Perennials 55+ generation are essentially a replacement economy, as they already own most of what they need.

The pandemic-related jobs crisis amongst young people is a key factor in the ‘baby bust’, as the IMF chart confirms:

  • One in six young people aged between 18 – 29 had either lost their jobs or had work hours reduced to zero
  • Even those who managed to keep their jobs saw their working hours fall – and 40% earned lower wages

As the New York Times reports, young women are being particularly impacted due to their roles as care-givers:

“Many thousands, possibly even millions, are postponing their education, which can delay their entry into the work force.”

There is, of course, a 9 month gap between conception and birth, so we can already be fairly sure that 2021 will see a further fall in births. And nothing much seems likely to change in 2022, given the problems facing young women and working mothers.

North East Asia is a good role model for the outlook, as it has the oldest populations in the world.

  • Japanese births are expected to fall to 800k this year, versus the 2.7m peak in 1949.  And Japan’s total population is now expected to fall below 100m by 2049 (versus its 128m peak in 2010), as its BabyBoom came 10 years earlier than the West’s
  • China is seeing even more adverse impacts.  As the chart shows, preliminary data suggests its births fell 15% last year versus 2019.  And, of course, 2021 births will likely be lower again, even though its lockdowns ended earlier than elsewhere.

Demographics are destiny. Companies and investors who focus on the implications of today’s ‘baby bust’ for their business will be the Winners, as today’s New Normal world develops.