Savings rates in emerging markets (EMs) like the Philippines are hovering near multi-decade highs and are likely to ease only slightly in the coming decades as demographic shifts reshape global capital flows, according to London-based think tank Oxford Economics.

In a Feb. 17 report, Oxford Economics economist Yash Adwani said the resilience in savings—despite aging populations—is being driven by EM baby boomers entering their peak earning years and rising life expectancy.

The think tank analyzed age-specific savings rates using microdata from census surveys across 15 EMs, including the Philippines, as well as Brazil, Chile, China, Colombia, the Czech Republic, Hungary, India, Indonesia, Mexico, Peru, Poland, Romania, South Africa, and South Korea.

The report said EMs face a demographic balancing act. A growing elderly population is beginning to weigh on savings, while baby boomers—now in their mid-30s to early 40s—are moving into their highest-earning years.

On one side, the rising share of older people, who typically dissave, is exerting downward pressure on aggregate savings. On the other, increasing life expectancy is encouraging households to save more over a longer horizon, helping support savings rates across most age groups.

The think tank stressed that EMs’ share of global gross domestic product (GDP) has risen markedly over the past two decades and is projected to exceed 50 percent by 2050, up from 41 percent in 2025 and 24 percent in 2000.

While aging demographics typically exert downward pressure on savings rates, Oxford Economics said this effect is likely to be offset by a larger share of the population with historically higher savings rates and longer life spans. As a result, EMs’ savings rates are expected to remain above historical norms.

The expanding weight of EMs in the global economy also means they will exert greater influence on global financial conditions in the years ahead. Elevated global savings, the report said, could continue to restrain upward pressure on real interest rates, keeping them relatively low.

“Continued high EM savings rates will have a transformative impact on EMs by supporting financial market development, strengthening balance of payments, and boosting financial stability,” the think tank said.

However, Oxford Economics emphasized that savings rates represent only part of the picture. The stock of accumulated savings and wealth effects also significantly shape global real interest rates.

It added that a rising share of retirees, for instance, implies larger pools of savings built up over working years, which could exert additional downward pressure on EM real interest rates even if headline savings rates moderate.

The think tank noted that savings generally rise with age, peaking around ages 45 to 55 as retirement nears. In EMs, savings are low or negative for those aged zero to 24, who rely on family support, and decline again after retirement.