When we talk about urbanization, its measures are often in the black – economic growth, physical expansion and population density are just a few of the indices often reported. So it might come as a surprise to some that cities are getting smaller in terms of population, in what McKinsey Global Institute is calling a ‘demographic challenge’ driven by two key shifts: the first is that global population growth is slowing due to lessened fertility and ageing; the second is a marked slow-down in rural-urban migration in some regions.

While some might feel a sense of relief that urbanization isn’t as rapid, these demographic changes present some bigger issues. Population growth has largely been considered one of the key drivers of economic growth. “In a sample of 943 global cities with more than 500,000 inhabitants in their metropolitan regions, 58 percent of GDP growth between 2000 and 2012 came from expanding population. Rising per capita income, which also includes the scale benefits to local economies from growing population, contributed the other 42 percent,” reads the newly-published report, titled Urban World: Meeting the Demographic Challenge.

The research in the report finds that populations have declined in 6% of the world’s biggest cities (often in developed economies), between 2000-2015. “From 2015 to 2025, we expect population to decline in 17 percent of large cities in developed regions and in 8 percent of all the world’s large cities,” continues the report. Of course, the two key demographic challenges are not being experienced equally across the world. For example, Japan’s population is among the furthest along the ageing ladder, and domestic migration between rural and urban, and indeed urban to urban, is slowing considerably. That being said, Tokyo and Nagoya are still growing as urban hubs, but other cities across the country, notably Sapporo, are seeing a sharp slow-down.japan-shrinking

Over in the USA, up-coming, vibrant cities such as Houston and Raleigh are able to buck the shrinking trend as they are attracting young talent, while America as a whole records better fertility rates than its Japanese counterparts. On the other hand, cities that are going through transitions and unable to hold on to or attract young professionals, such as Cleveland and Pittsburgh, are experiencing flat growth or shrinking. Cleveland’s population, in fact, decreased by up to 0.1% (compound annual growth rate) between 2012-2015, while Pittsburgh stayed more or less the same over the same time period.usa-shrinking

In Western Europe, the demographic shifts are too being experienced differently across different cities. Though population growth has generally been slow, at around 0.7% annually between 1990 and 2015, it is expected to continue to decline to just 0.5% between 2015 and 2025. Meanwhile, the continent is ageing at very different speeds – UK cities Blackburn and Bradford have some of Europe’s youngest population with 22% being under the age of 15. These cities also have the highest fertility rates in the UK. In contrast, Italy’s Genoa and Salamanca in Spain have just 12% of their population under 15, and half the fertility rates of their British counterparts, leading to projected shrinking. Nevertheless, and similarly to the American experience, some cities are maintaining population growth and with it, economic growth and they are the usual suspects – global cities able to attract high net worth individuals from across the region and world. “The capital cities of Berlin, London, Oslo, Paris, and Stockholm are among the Western Europe cities that are experiencing growing populations… These cities have had roughly 1 percent or higher urban population growth per year, about double the average of cities we looked at in Western Europe,” reads the report.europe-shrinking

Meanwhile, developing regions, namely Africa, the Middle East, Central Asia and Eastern Europe are not experiencing quite the dramatic demographic shifts as the other regions mentioned. However, its likely cities in these areas will see similar shrinking patterns down the line. “For instance, in the Middle East and North Africa, the urban population grew at a compound annual rate of nearly 5 percent from 1950 to 1970 but is expected to increase by only 1.5 percent a year from 2025 to 2035. The contrast between the two periods is expected to be even more dramatic in Eastern Europe and Central Asia, with urban population growth plunging from 3.2 percent from 1950 to 1970 to only 0.3 percent from 2025 to 2035.”

So what does this mean for the city of the future? The key takeaways from McKinsey’s quite startling report are that cities need to sharpen the citizen services and strategize to boost productivity to maintain and inspire economic growth, where the demographic shifts are hitting the hardest. “Many more cities are likely to design strategies to appeal to particular demographic groups as they compete with other urban areas to retain and attract citizens. Cities will need to demonstrate flexibility in adapting to the demographic challenges that lie ahead, and focus on maintaining their dynamism and vibrancy to attract talented workers and successful businesses.”