The European Bank for Reconstruction and Development (EBRD) has issued a stark warning about the economic repercussions of ageing populations, describing the trend as a ‘ticking time bomb’ for GDP growth. In its annual report released on Tuesday, the EBRD highlighted that declining birth rates and an increasing share of elderly citizens are already undermining economic progress in several nations. Emerging Europe, in particular, is projected to see a reduction in annual per capita GDP growth by nearly 0.4 percentage points between 2024 and 2050 due to a shrinking working-age population.
EBRD Chief Economist Beata Javorcik emphasized that post-communist countries are ‘getting old before getting rich,’ with a median age of 37 and an average GDP per capita of $10,000—far below the levels seen in advanced economies during similar demographic stages. The report identified multiple factors contributing to declining birth rates, including shifting social norms and the impact of motherhood on women’s career earnings. While many EBRD member states have implemented incentives to encourage higher birth rates, these measures have failed to produce significant or lasting results.
Migration, often suggested as a solution, remains politically unpopular in most regions. Additionally, public sentiment toward leveraging artificial intelligence (AI) to boost productivity is mixed. Javorcik argued that extending working lives through retraining and pension reforms could be the most effective strategy, though it requires candid discussions with voters about the implications of demographic shifts.
The report also noted that ageing leaders, who tend to prioritize pension protection and restrict migration, further complicate efforts to address the issue. Globally, the average age of leaders is now 60, significantly older than the median adult. In autocracies, this gap has widened to 26 years in 2023, up from 19 years in 1960.
For newer EBRD member nations like Nigeria, the focus should be on job creation and private sector expansion to capitalize on their current demographic dividend. However, Javorcik cautioned that this window of opportunity is fleeting, as birth rates in other parts of Africa are also declining. ‘These countries must act now to secure their economic future,’ she said.