SINGAPORE -- Some 60% of the world's population of people over 65 years old will live in Asia by 2030, causing a number of economies in the region to face demographic challenges before they get rich enough, according to a recent report by consultancy Deloitte.
In 25 years, the number of over-65s in Asia will be more than the total population of the Eurozone and North America combined, the report says. In particular, China will bear the greatest burden. The report estimates that the country is already home to more than 150 million people aged over 65, accounting for more than 40% of the demographic in Asia.
While the increase in the aged population will create business opportunities for industries, including healthcare, it also means many challenges for Asian economies. Calling demographic change a "wake-up call" for Asian economies, the report suggests that the pace of aging could hinder economic growth in the region if improvements such as higher workforce productivity and female labor participation are not realized.
For instance, the percentage of the labor force -- the population aged 15-64 -- in the total population of mainland China will see a sharp decline in the coming decade, from around 70% today to less than 60% in 2050, according to data from the United Nations. The acceleration of aging, combined with other challenges in the workforce, likely mean China "will get old before it fully succeeds in getting rich," the report says. Deloitte estimates that, all other factors being equal, demographic challenges will push down China's economic size by 4.2% in the next decade.
The report says much of the rest of Asia will "mirror" China's demographic shift. In particular, Thailand, Hong Kong, Taiwan, Singapore and South Korea have relatively high life expectancy and low birth rates, so they will "face demographic-driven challenges [similar] to those of China." Demographic factors are expected to put pressure on the size of Singapore's economy by a whopping 8.4% in the next 10 years, and Thailand's by 4.4%, according to Deloitte. Productivity challenges in the workforce, along with budget pressures related to supporting the graying population, will likely negatively affect these economies.
Meanwhile, India has the potential to become a predominant workforce in the region, accounting for more than half of the increase in Asia's workforce in the coming decade. India's potential workforce will grow from 885 million people today to 1.12 billion in 2050, the report says. "These new workers will be much better trained and educated than the existing Indian workforce, and there will be rising economic potential coming alongside that," said Deloitte India economist Anis Chakravarty.
The report suggests economies facing workforce challenges to open up further for immigrants. "Accepting young, high-skilled migrants can help ward off ageing impacts on growth," the report notes, but adds that appropriate policies and property prices must be in place for this immigration to happen on a sufficient scale.
Not everything is gloomy, however. The report points out that the aged population in Asia is rising as a "growth cluster" of vibrant businesses in the region, especially in areas such as healthcare and residential facilities for the elderly. Digitization efforts to improve productivity and fill in the workforce gap will also create new opportunities for businesses to tap into.
Some companies are already tapping into these opportunities. Singaporean hospital group Raffles Medical Group is set to open two hospitals in China in the next few years, and already runs clinics in Japan. Medical tourism is also popular in the region.