Asia is expected to see one clear demographic trend emerge in the next decade: a widening divide between the southeast, where the working-age population is growing at a strong pace, and the northeast, where the labor force is forecast to shrink.
“The next decade will be very different from previous decades when most of Asia was still experiencing demographic dividends, including China and Korea,” Bank of America Merrill Lynch (BofAML) Economist Hak Bin Chua said in a report.
Japan is home to the fastest aging population in the world, with almost a quarter of its population over the age of 65. The country has struggled with sluggish growth stemming from a shrinking workforce, which has put pressure on the government to boost productivity levels.
The U.N. sees the working-age population in Indonesia and the Philippines peaking in 2058 and 2085 respectively, later than previously anticipated. At the same time it brought forward forecasts for other Asian countries including China, where the working-age population is expected to peak in 2015, and its total population, currently around 1.3 billion people, is seen decreasing after 2030.
India and Indonesia, the two Asian countries hardest hit by the rout in emerging markets, have also been criticized for failing to capitalize on abundant labor resources and low labor costs, as they haven’t done enough to attract foreign direct investment, another key factor driving long-term growth rates.
In the parts of Asia that are aging, such as Japan, China, South Korea and Taiwan, analysts said they expected to see further steps to increase productivity or change the structure of the workforce to help offset the implications of an aging population.