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Will Asia Grow Old Before It Grows Rich?

Professor of Financial Economics and Part-time Value Investor, Transfin.
Nov 7, 2019 6:33 AM 2 min read

What happens when a country grows old? When its working age population shrinks even as its retired citizens grow in numbers?


Lost in Japan: Ask Japan, which is experiencing “super-ageing”, where a third of the population is already above 60, affecting everything from the size of cities to GDP growth.


Or ask virtually any country in the developed world, which is experiencing such demographic shifts.


Old Without Gold: But what happens when a country grows old before it grows rich? For that, look to Asia.


After decades of strong economic growth, more and more people are asking the question - Is this growth eternal or euphoric? As China, Vietnam, Malaysia, South Korea and other Asian countries follow in Japan’s footsteps and lose out on decades of demographic dividend, fears are rising that median ages will soar even as GDP per capita stagnates. This could leave these countries stuck in a middle-income trap.


Will Asia Grow Old Before It Grows Rich?


Forever Young (Not): Increasing incomes have come with increasing life expectancies, better access to better healthcare, and falling fertility rates. If nations age rapidly without building the necessary economic conditions to cater to 60+ citizens – or to maintain growth even with a diminishing working age population – the consequences could be dire.


What About India?: Unlike most of its continental peers, India’s demographic dividend will continue to deliver – at least until the mid-21st century (when the proportion of working-age population against total population will peak).


Until then, India has ample room and opportunity to unleash high economic growth and build a strong middle-class. And after that, too, fortunately, we’ll have Japan and other countries’ experience in dealing with ageing demographics to learn from and accommodate in our policy-making.



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