Germany is the most populous and productive economy in Europe, with 80 million people and a GDP of almost $4 trillion. It’s also the world’s third largest exporter, and that’s why it had the largest trade surplus globally in 2014 with $285 billion.
For all of its economic power, Germany has a key weakness that could potentially be its Achilles heel: it’s projected that Germany’s population will decline significantly over the coming decades, and the ratio of workers to dependents will become one of the worst in the world.
Every year, there are 8.4 births and 11.3 deaths per 1,000 people in Germany. The way this plays out over time is that the percentage of Germans under 15 will fall to 13% of the population by 2050, while the amount of people over 60 years old is to rise to 39%.
In the future, it is likely that there will not be enough youth or workers in the country. As Baby Boomers retire, there will be a larger burden placed on those paying into the government’s social safety net and other programs. Further, this widening gap will also mean a significant loss of experience, skill, and know-how in the workforce that will create coinciding economic challenges for the population.
In many Western nations, immigration plays a key role in keeping a population with low birth rates to be sustainable. However, in Germany’s case, both the high and low immigration scenarios look dire for future numbers. Germany’s state statistical authority currently projects a “high immigration” trend resulting in a drop to 73.1 million people by 2060, while a low-end estimate sees the population falling all the way to 67.6 million.
The U.N. projects that one in every six Germans will be over 80 years old by 2050. Are Germans comfortable with their nation remaining on this path?
Full article: Germany’s Looming Demographic Cliff (Zero Hedge)