From research: The economic implications of population aging

What are the effects of population aging on key national economic indicators? The aging trend is driven by declining fertility rates, improvements in healthcare and living standards, and increased longevity, which determine the national economic indicators and global economy. Tomáš Kábrt, on behalf of VŠE, assessed the impact of demographic shifts on external financial stability represented by current account balance (CAB) and net international investment position (NIIP) in his paper published in Economic Analysis and Policy journal.

Using the benchmark model based on panel data analysis and the two-way effects estimator (with current account balance as the main dependent variable, while savings rate as an alternative dependent variable), the demographic determinants of CAB across income groups, continents, and time periods between 1993 and 2021 in 180 countries were examined. The data were obtained from the World Bank database and the International Monetary Fund. The findings reveal that the demographics statistically affect CAB and SAV; however, the effects are heterogeneous across income groups and continents. An increase in the old dependency ratio has a negative effect on CAB in Africa. The fertility rate has a negative impact on CAB in Africa but an ambiguous effect in Asia and Europe. Also, the relationship between CAB, SAV, and population growth varies depending on income levels.

Read further about factors contributing to those results, methodology and limitations of this at: https://www.sciencedirect.com/science/article/abs/pii/S0313592624003096?via%3Dihub