Ageing population set to slow Australia’s growth as AI reshapes economy

Australia is heading towards a very different economic future, with deaths projected to outnumber births by the 2060s as falling fertility rates and an ageing population reshape the economy. Population growth is expected to slow from its historical 1.4% to 0.9%, while the shrinking share of working-age Australians will put pressure on economic activity and government finances. Real GDP per person is forecast to grow by just 1.2% a year over the next 40 years, compared with 1.5% previously. However, artificial intelligence could provide a productivity boost – assuming 'it lives up to the hype'.

More Australians will be dying than being born in 40 years as major report predicts future of lower growth | Australian economy | The Guardian

1. Using a production possibility frontier, explain how an ageing population could reduce Australia’s rate of economic growth.

2. Using the information in the article, analyse how artificial intelligence could increase Australia’s economic growth. Use an AD/AS diagram in your answer.

3. Discuss the view that the main economic challenge facing Australia over the next 40 years will be managing the effects of an ageing population.