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Getting Older In Asia

Asians are getting older. As a report from the Asia Development Bank and a story in the FT tell us, aging populations across Asia will have a significant effect on economic productivity over the next several decades:

…the surge in the Asian workforce that began in the 1950s with changes in the birth and death rates contributed hugely to the region’s post-war economic success, raising the amount of labour available and increasing the size of the savings pool that could be mobilised for investment.

But that favourable demographic structure is coming to an end as continued increases in life expectancy combine with the retirement of the bulge years workforce and low birth rates to create societies in which economically inactive retirees account for an ever growing share of the population.

The process has progressed furthest in Japan and South Korea, where the proportion of the population that is over 65 had reached 22.6 per cent and 11 per cent in 2010, compared with 7.9 per cent and 3.5 per cent in 1975.

The ADB predicts this will lead to a tangible drag on economic growth from Singapore to Japan to China over the next several decades. South Korea, for instance, will see a drag of 0.77 percentage points on its growth between now and 2030. Countries with younger populations, like India, Pakistan, and the Philippines, can take advantage of this situation for their own economic benefit.

The Mead advice to investors: Think demographically when investing in Asia. Countries with younger populations and growing workforces are not only more energetic and creative; their governments will be more likely to pursue pro-growth economic policies as they struggle to create jobs for their growing workforce.

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  • Alan Kellogg

    As the population ages sooner or later it will reach the point of a die off. The elderly tend to do that, die off, and as the average age advances you’ll see more and more reach the end of their lives.

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