Population growth rate in Asia has been on a steady decline, with economies such as China, Hong Kong and Singapore going into negative growth in the next decade. As baby boomers age, there will be increasingly fewer young workers available to support the elderly in many countries in Asia. In addition, slower population growth would imply slower GDP growth and lower productivity.
The main culprit of these demographic changes is the change in fertility rate from being relatively strong in earlier decades to being drastically reduced today. This can be seen across many Asian economies, notably in China due to its one-child policy. This situation is set to continue as fertility rates further decline further and socio-economic pressures and lifestyle changes exacerbate the problem. In fact, fertility rates in China, Hong Kong and Singapore have long dropped below the sustainable rate of 2.0.
Many countries have introduced reforms and measures to tackle their lowering birth rates. China has abandoned the venerable one-child policy. Some Asian governments are exploring the possibility of raising the retirement age to boost labour utilisation. It is now said that “60s is the new 40s”.
Finally, the relaxation of immigration policies is a quick and direct way to boost stagnant birth and fertility rates. Labour productivity can also be raised as economies embrace technology and innovation.
The challenge of an aging population is common to all Asian countries, though the severity may be divergent. For countries still possessing a sustainable fertility rate, the issue is less acute. More developed economies with low natural birth rates would enjoy a better standard of living and benefit from immigration. China seems to be presented with the most challenging situation as it suffers from the combination of a rapidly declining birth rate alongside a relatively low per capita income.
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