Demographic Change and Fiscal Sustainability in Asia | Asian Development Bank

Demographic Change and Fiscal Sustainability in Asia

Publication | April 2016
Demographic Change and Fiscal Sustainability in Asia

A simulation of the effect of Asia’s population aging and economic growth on the region’s fiscal sustainability indicate that overall, demographic change will adversely affect Asia’s fiscal health.

Population structure affects government revenues as well as expenditures. For example, a younger population requires more public spending on education. The authors use a simple stylized model and National Transfer Accounts data set to simulate the effect of Asia’s population aging and economic growth on the region’s fiscal sustainability. While there are differences across countries, with some countries more affected than others, overall, the simulation results clearly indicate that demographic change will adversely affect Asia’s fiscal health. This points to a need for Asian countries to better understand and prepare for the fiscal impact of population aging.

Contents 

  • Abstract
  • Introduction
  • Methodology
  • Data
  • Fiscal Projections
  • Decomposition Results
  • Concluding Observations
  • Appendix
  • References