The urban world is facing a double demographic hit on economic growth. Between 2000 and 2012, an expanding population drove nearly 60 percent of economic growth in the world’s large cities, but those days of easy urban growth are over. First, global population growth is slowing due to declining fertility rates and an aging population. Second, the pace of rural-to-urban migration is waning in many regions.

A new report from the McKinsey Global Institute (MGI), Urban world: Meeting the demographic challenge in cities, shows the impact already. Between 2000 and 2015, population declined in 6 percent of the world’s largest cities—most of them in developed economies. In the next decade, we expect 17 percent of large cities across developed regions to see their populations decline.

MGI compared three developed countries and regions—Japan, the United States, and Western Europe—to understand the implications of this demographic double hit. Cities’ growth prospects will reflect very different demographic footprints and dynamics shaped by local birth rates and death rates, net domestic migration, and net international migration. This exercise reveals that the United States is arguably in a better demographic position than the other regions.

Japan’s challenges are the most acute of the three regions. More than one-quarter of the country’s population is over 65 years of age, compared with 20 percent in Western Europe and about 15 percent in the United States. Japan’s urban population growth was only 0.6 percent between 2010 and 2015, and is expected to be flat over the next decade. Japan’s urban landscape is relatively static with little migration between cities and very limited immigration. It is a nation that is “aging in place.” Tokyo, Nagoya, and a few other regional cities continue to attract people from other cities, but nearly 40 percent of the nation’s cities lost population between 2012 and 2015 (Figure 1). Cities like Akita, Aomori, and Hakodate, for instance, could experience a further 50–60 percent decline in the number of women of childbearing age between 2010 and 2040. In such cities, the challenge of providing health and elderly care services is rising.

Read the rest of the article at Brookings Institute