That said, this is a case where the derivative, GDP per capita, is actually more important.
Just ask the average resident of Iceland and DR Congo.
From The Capital Spectator:
Forecasting economic activity is generally a thankless task — unless you’re using demographics as a modeling foundation, which provides a surprisingly accurate means for looking ahead. That’s good news for analysts trying to develop robust estimates of GDP growth over a medium-to-long-term horizon. But it’s also bad news if you’re expecting economic activity to accelerate on a sustainable basis.
Many studies over the years have documented the relationship between demographics and economic activity. A 2016 Federal Reserve paper, for instance, connects the dots and finds that slower population growth and real GDP growth are correlated (“Understanding the New Normal: The Role of Demographics”). Some researchers also find evidence that demographic trends influence trends in financial markets (“Demographic Changes, Financial Markets, and the Economy”).
Ruchir Sharma, chief global strategist and head of emerging markets at Morgan Stanley Investment Management, summarizes the demographic-economic connection in “The Boom Was A Blip” in the May/June 2017 issue of Foreign Affairs. “The UN now predicts that worldwide, population growth rates will continue to decline through 2025 and beyond,” writes the author of The Rise and Fall of Nations: Forces of Change in the Post-Crisis World.
Such long-term forecasts, which are based on a relatively simple combination of birth and death rates, have an excellent track record. And the economic implications of that trend are clear: every percentage point decline in working-age population growth shaves an equally large chunk off the GDP growth rate.Let’s kick the tires on this concept by comparing US GDP growth with the country’s working-age population. We’ll use data via the St. Louis Fed’s FRED database (tickers GDPC96 and LFWA64TTUSQ647N). The available demographic numbers only dates to 1960, which is too short to draw final conclusions. Nonetheless, it’s a reasonable way to begin, if only to get a sense of how real-world numbers stack up....MORE