The United Nations predicts that humanity will reach its peak population by 2083. However, a growing number of economists, such as University of Pennsylvania professor Hazard Fernandes Villafuerte, contend that this UN prediction is overly optimistic.

Instead, he argues that 2055 will mark the year of peak global population, after which numbers will begin to decline. If this proves true, economies worldwide will face pension crises, reduced economic growth, and potential government debt crises much sooner than anticipated.

So, why are the UN predictions, which many, including myself, have relied upon, proving to be so inaccurate? And what are the precise implications for the global economy?

As always on Money & Macro, we have conducted a deep dive into the relevant economic research, distilling the strongest arguments and supporting evidence for you.

Our first argument is that significantly fewer people are being born today than the UN estimates.

Consider this graph from Colombia, a country for which Professor Villafuerte recently argued that the UN's birth rate estimates are drastically incorrect.

This line represents historical UN estimates for the number of new Colombians born each year.

Conversely, this line illustrates the actual births reported by the Colombian government.

As evident, the UN has consistently overestimated the total number of Colombians born by approximately 30% for several years.

This is a substantial discrepancy, and similar gaps are observed in other large developing countries such as Turkey, Egypt, and more recently, Mexico.

In Mexico's case, the trend even reversed. For years, the UN underestimated births there. However, in the last couple of years, it has also begun to overestimate them in Mexico.

So, why is the UN so inaccurate in its total birth figures for these significant countries?

The issue is not that UN researchers employ a flawed methodology.

In many impoverished nations, governments genuinely lack accurate data on the actual number of births.

For instance, in extremely poor and unstable countries like South Sudan, Yemen, and Madagascar, governments naturally lack the capacity to accurately count all births.

Therefore, it is reasonable for the UN to estimate the government's birth counting accuracy and then add a certain number of births to account for these inaccuracies.

The real problem, according to Villafuerte, is that the UN itself classifies both Colombia and Turkey as countries with almost complete vital registration systems.

At least according to an index from the UN's World Health Organization.

This is truly perplexing.

The UN states that the data is accurate, yet it makes a massive correction by adding significantly more births than reported by the government, implying that its population predictions for these countries will be excessively high.

If this problem exists for medium-sized countries like Colombia or Turkey, imagine its implications for China, which alone accounts for nearly one-sixth of the world's population.

Even minor errors in Chinese birth statistics can alter global forecasts by tens of millions of people.

The challenge, however, is that China's official data are among the most uncertain globally, and some demographers believe the distortions here could overshadow all other factors.

This brings us to our second reason why humanity's population will shrink far faster than we anticipated.

China's birth figures cannot be trusted.

Specifically, Yi Fuxian, a demographer at the University of Wisconsin-Madison, argues that China's population figures are probably significantly inflated.

In China, population counts are conducted by local governments.

However, these local governments have a strong incentive to inflate their birth statistics before submitting them to the central government.

After all, more babies mean more funding from Beijing for schools, pensions, and poverty relief.

As evidence, Yi Fuxian cites the example that the regular numbers reported by local governments in the year 2000 totaled 70.7 million births.

However, the national census conducted that same year surprisingly counted only 13.8 million infants under one year old, leaving a 12% discrepancy.

This problem is likely to worsen now that the Chinese government explicitly encourages more births and has pledged to reward local governments that achieve this.

As evidence for this claim, Yi Fuxian provided the example that when China introduced the two-child policy in 2016, the National Health and Family Planning Commission announced 18.85 million births, an 827% jump from just the previous year, and some provinces like Shandong and Xinjiang reported increases of 56% and 75%, respectively.

Crucially, however, vaccine and school enrollment data showed no corresponding increase, providing substantial evidence that this baby boom was largely fabricated to portray the policy as successful.

Despite this evidence that China inflates its birth figures, the UN does not account for it, exacerbating the problem that the UN likely believes far more people are being born today than is actually the case.

And yet, the situation is even more concerning.

But first, let me tell you about what I am really quite certain about, which is that my two kids really don't like to sit in the back of the car for very long, which is a problem. Our video sponsor, Salie, a super convenient essay provider, has helped me out with a lot.

You see, we like taking our kids to the mountains of Switzerland once a year. But given that Switzerland is not in the EU, I'd have to turn off roaming and my GPS when I drive into Switzerland next week. So try a phone company, get a local eSIM with two the screaming kids in the back. No thanks.

This year I have installed Salie on my phone. Then I choose my data plan well before going on my trip for maximum comfort. And in this case, I'm going to take the Switzerland data plan. And now it says got a coupon? Yes, I do Money Macro and bam, there's my discount. Problem solved.

Now I can just drive into Switzerland and keep driving straight to my hotel. And when I get there, I do not have to rely on public Wi-Fi to check the comments. You guys are making under this video and whenever I go somewhere else, I just know how it works. I open the Salie app again and get a new local SIM card.

So if you are going abroad soon, do like me. Download this app and use the discount code Money Macro at checkout for an exclusive 15% discount on all Salie eSIM data plans.

And after you've done that, let's turn to the third reason why peak humanity may be closer than we thought.

The UN is hopelessly optimistic about fertility bouncing back.

Okay. Have a look at this chart for fertility in South Korea.

In the last decade, the number of babies per woman has relentlessly fallen from 1.2 to a staggering 0.7.

Luckily, the UN thinks it will start bouncing back next year.

And hey, that's actually the same year when both Europe and China's fertility will turn around as well.

Similarly, after a relentless decline, US fertility is expected to completely stabilize starting next year.

That seems absurd, doesn't it?

Of course, the UN is not naive. There is a rationale behind their assumption that fertility will eventually rebound.

Indeed, in many advanced Western countries like Germany, the US, and France, fertility rates did rebound as societies adapted to provide improved childcare services and a better work-life balance for both working men and women.

This led the UN to adopt the idea that fertility follows a three-phase pattern.

In phase one, a country begins with high fertility; then, in phase two, as it develops and becomes wealthier, fertility plummets.

In this phase, fertility levels off as it dips below replacement rates, and finally, in phase three, fertility recovers slightly.

According to the UN, China, the US, and much of Europe should now be in phase three, thus they expect a slight rebound in fertility.

But so far, this rebound has not materialized.

And because no one knows exactly when this will occur, the UN simply assumes the rebound begins immediately.

And that is why their projections often appear so unrealistic.

However, to be fair, the UN's past global population forecasts have actually been quite accurate.

For instance, in 1968, the UN projected the world's population in 1990 to be 5.44 billion, remarkably close to the actual figure of 5.34 billion.

Similarly, in 2010, the actual global population was 7 billion, aligning with earlier UN projections ranging from 6.8 to 7.2 billion.

Not bad at all.

However, when it comes to recent birth forecasts for specific countries, particularly wealthy or aging ones, the UN's track record is far less impressive.

Consider South Korea again.

For years, the UN has predicted that fertility would stabilize or begin to rise.

It never did.

The same pattern is observed in Chile and Colombia.

The UN has consistently overestimated birth rates and underestimated the speed of their decline.

Thus, these UN predictions appear incredibly naive.

And it's not just skeptics like Professor Villafuerte who hold this view.

Other major forecasting groups, such as the Institute for Health Metrics and Evaluation, expect the global population to peak around 2064.

The situation becomes even more dire.

The Vienna-based IIASA places the peak even earlier, around 2018.

Finally, according to The Economist, if current fertility trends persist for just another 25 years, humanity's population could peak as early as 2065, nearly two decades sooner than the UN anticipates.

This implies that all the alarming analyses regarding a global economic slowdown and potential pension crises could materialize much faster than previously believed.

So, what are the implications for the global economy?

Fortunately, as I noted in my previous analysis, the outlook is not entirely negative.

Some regions, such as India and later Africa, may actually be poised for potentially strong economic growth, as they are expected to experience what economists term a demography dividend.

Thanks to a relatively young population and declining birth rates, these countries will enter an era with a large working-age population relative to both the elderly and children who cannot work.

For example, this is India's demographic pyramid, where a large cohort of young people who have recently entered the workforce is clearly visible.

Africa, on the other hand, is still decades away from this turning point.

Currently, high fertility rates mean many children and a heavy dependency burden, which potentially limits growth.

However, around 2050, as fertility rates decline and the working-age population share expands, Africa could emerge as the world's next major growth engine.

But as you can see, the population pyramids of Europe, China, and Japan look drastically different.

This bulge of workers will soon exit the workforce, meaning fewer and fewer workers will be economically productive.

As I mentioned in my previous video, this will likely lead to the Japanification of all major economies in East Asia and Europe, implying slower economic growth and higher government debt as the population crisis intensifies.

We will see more and more countries reach a government debt limit, which will either result in a debt crisis or a reduction in pension benefits.

This will have major implications for the global balance of power, as Japan and Europe decline first, with China and the US following somewhat later.

As a consequence of the same trend, India will see its power increase first, then decline as Africa gains the demographic advantage.

These conclusions still hold; however, thanks to the new data presented in this video, many dates in my previous analysis will change.

Specifically, in that video, I mentioned how China's demographic backlash would come later but be very severe.

However, the fact that China has long misrepresented birth statistics may mean it will follow the path of Europe and Japan sooner.

More broadly, as we have seen here, given the relentless decline in fertility in recent years, the global population crisis will arrive sooner everywhere and will likely be more severe than we previously thought.

That's my perspective. What are your thoughts?

Have I been too critical of the UN, or do you agree that there is strong evidence that the world's population will begin to fall much faster than we previously thought?

Let me know in the comments below.

And remember, if you are traveling abroad soon, download Salie and use our discount code to keep your phone charges low.

This also supports the channel, as it increases the likelihood that sponsors will continue to support our videos.