65656
When China reached its old-age-population peak in 2011, its per capita income was still only at 20% of the US level;  and when Vietnam reached it in 2014, that figure was just 10%.
When China reached its old-age-population peak in 2011, its per capita income was still only at 20% of the US level;  and when Vietnam reached it in 2014, that figure was just 10%.

Asia Can Preserve Growth

Growth is picking up across many advanced and emerging market economies, and financial markets have, for the most part, proven to be resilient

Asia Can Preserve Growth

Asia has been the world champion of economic growth for decades, and this year will be no exception. According to the latest International Monetary Fund Regional Economic Outlook, the Asia-Pacific region’s GDP is projected to increase by 5.5% in 2017 and 5.4% in 2018.
Despite escalating geopolitical tensions, most countries in the region have maintained their economic momentum. They have benefited from policies supporting strong domestic demand in China and Japan, and from favorable global conditions. Growth is picking up across many advanced and emerging market economies, and financial markets have, for the most part, proven to be resilient, WEForum.org reported.
Nonetheless, Asia will still have to confront fundamental medium- and long-term challenges, not least the aging of its population–a problem that is well known to most policymakers. In past decades, the region reaped a demographic dividend from its young, expanding workforce and strong growth policies. But this dividend has already run out for “old” countries such as Japan and China. With fertility rates declining and people living longer, the workforce is shrinking and getting older at the same time.
To be sure, not all Asian countries are aging at the same rate. In China, Japan, Korea and Thailand, these demographic trends could subtract anywhere from 0.5 to a full percentage point from annual growth over the next three decades. But in “young” countries such as India, Indonesia and the Philippines, the working-age population will actually increase, adding from 1-1.5 percentage points to average annual growth over the same period.

Ageing Faster
Why is this occurring? For starters, although Asia is not the most aged region in the world today, it is aging remarkably fast. One indicator of this is the old-age dependency ratio: the share of the population that is 65 and older. In Europe, it took 26 years, on average, for this ratio to increase from 15% to 20%; in the United States, it took more than 50 years. Among Asian countries, only Australia and New Zealand aged at similar speeds. In most other countries in the region, this transition took–or will take–less than 15 years.
With the exception of already-rich Asian economies such as Australia, Hong Kong, Japan and Singapore, per capita income in Asian economies falls, or will fall, far short of other advanced economies at similar stages of the aging cycle.
For example, when China reached its old-age-population peak in 2011, its per capita income was still only at 20% of the US level; and when Vietnam reached it in 2014, that figure was just 10%. And despite its young population and strong growth, India’s per capita income will only have reached 45% of the US level when its old-age population peaks in or around 2040; and that assumes, optimistically, that India will maintain very strong growth over the next few decades.

Boosting Productivity
Moreover, slowing productivity growth could compound Asia’s demographic problem. Since the 2008 financial crisis, productivity growth has decelerated in Asia’s advanced economies and, to a lesser extent, in its emerging economies, too. Thus, the region’s push to catch up with countries at the global technology frontier has stalled over the past decade.
To boost productivity in the future, Asian governments will have to implement well-targeted structural reforms today. Considering Asia’s rapidly aging population, it is crucial that such reforms include policies to protect the elderly, enhance social safety nets, and drive long-term growth. Governments will also need to make it easier for women and older workers to participate in the labor force, by expanding child-care facilities and creating incentives for firms to relax their retirement-age requirements.
As Australia, Hong Kong, New Zealand and Singapore have shown, immigration can soften the blow from rapid aging. And by strengthening pension systems, including through minimum guaranteed benefits, governments can provide a safety net for the vulnerable elderly and reduce incentives for precautionary savings.

 

Short URL : https://goo.gl/NjFYSd
  1. https://goo.gl/m8O90f
  • https://goo.gl/rOLsHx
  • https://goo.gl/M6if6N
  • https://goo.gl/T0xM6P
  • https://goo.gl/tnzcVa

You can also read ...

All three sides can’t agree on a few key issues.  Top of the list: The manufacturing of cars.
No meaningful progress is being made in NAFTA trade talks...
IMF Cautions Kenya on Rising Debt
The International Monetary Fund has cautioned that Kenya’s...
The rules say that EU countries should have budget deficits below 3% of GDP and public debt below 60% of GDP.
National budgets of six eurozone countries may break the...
AT&T-Time Warner Merger Case Politically Motivated
The US Justice Department’s lawsuit to block AT&T’s $85...
Gold Inches Up as Dollar Dips
Gold prices crept up on Wednesday amid a softer dollar, with...
Mexico Boosts Minimum Wage
The bittersweet news for Mexico’s poorest workers: the...
UK Slashes Growth Projections
Britain slashed its official projections for economic growth...
Credit Tightening Dominoes Threaten Asia With Hidden Risks
With Asia’s economies humming along, consumer prices rising...

Add new comment

Read our comment policy before posting your viewpoints

Image CAPTCHA
Enter the characters shown in the image.

Trending

Googleplus