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Aging Asia Requires Bold Policy Action - ADB Report
HONG KONG, CHINA – Developing Asia’s demographic landscape will change dramatically in coming decades and policymakers will need to manage the process carefully to ensure future growth as populations age, says a new Asian Development Bank (ADB) report.
In the theme chapter of Asian Development Outlook Update 2011, released today, ADB says developing Asian nations remain relatively young, but are growing older very rapidly, which will put many economies under pressure.
“Asia’s population is aging at a speed unprecedented in human history,” said Changyong Rhee, ADB’s Chief Economist. “As the population dividend that fueled Asia’s labor-intensive growth becomes a tax, the region must find more innovative ways to sustain its economic expansion, and to provide more comprehensive support for its growing elderly population.”
Many parts of East and Southeast Asia are already seeing a significant rise in the number of elderly. The People’s Republic of China―the region’s biggest economy―is set to see the proportion of elderly to working age people quadruple between now and 2050, surpassing the United States. At the same time, younger countries such as India, Pakistan and the Philippines have a relatively narrow window of opportunity to take economic advantage of their youthful populations before they also begin to age.
These demographic challenges will require a range of structural reforms and actions. In middle and advanced aging societies, governments will need to strengthen state support systems for the elderly, which remain largely underdeveloped.
“Asian governments need to promptly start strengthening, and in some cases start building from scratch, their national pension, health care and social security systems,” said Mr. Rhee.
Developing Asian nations must also make their labor markets more flexible, allowing greater mobility of workers from younger, labor-abundant countries to those where labor is scarce. Increased investments in physical and human capital will also help both older and younger countries sustain rapid growth in the face of the demographic transition.
With its high levels of savings and capital, developing Asia is well positioned to tackle future demographic challenges, the report says. At the same time, it should be looking to take advantage of opportunities, such as a large and growing pool of retirement savings, which could benefit the region as a whole. Such funds could be put to work to support financial sector development and to invest in countries where capital is scarce.
Asian Development Outlook and Asian Development Outlook Update are ADB’s flagship economic reports analyzing economic conditions and prospects in Asia and the Pacific, and are issued in April and September, respectively.