A silver lining for aging Asia
Many Asian economies will age more rapidly over the next several decades, including Hong Kong, Japan, mainland China, Singapore, South Korea, Taiwan and Thailand. Asia’s working-age population peaked in 2015 and will gradually decline at an accelerating rate in the coming decades.
By 2050, the elderly population in these countries on average is expected to increase to 27% from 7% in 1995. Reduced labor supply creates a drag on growth, but this can be mitigated by higher labor participation, investment in capital-intensive sectors, and government policies that address productivity.
That said, it is a gravity-defying act. With fewer workers and an increased elderly population requiring more savings to sustain spending in retirement, greater pressure on public finances is expected.
As such, the more prepared an economy can be while still relatively youthful, the more likely it is to age gracefully. With lower potential output, the goal to lift GDP per capita rapidly and, thus, the standard of living is more difficult.
Some Asian countries, such as China and Thailand, will still not be moderately developed economies while they age rapidly.
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