0304 GMT April 26, 2018
The fund’s latest Asia Pacific regional economic outlook, released this month, warned that the continent was in danger of growing old before it becomes rich because of plunging birth rates. This threatens to leave it in far worse shape than the developed world, which at least became wealthy before the wrinkles set in, ft.com wrote.
In sharp contrast, a study of Africa, released in April, concluded that a key reason why the continent has been unable to copy Asia’s rise out of poverty is its 'sluggish pace of demographic transition,' ie that its birth rate remains far too high.
In theory, one simple solution that would help alleviate both problems would be a large-scale shift of younger people eastward, even if the complexities and difficulties associated with such an endeavor make it virtually impossible to envisage.
Fears over the impact of rapid aging in Asia, particularly its eastern extremes, are not new.
A year ago Bank of America Merrill Lynch estimated that 80 percent of the world’s elderly will live in emerging markets, primarily in Asia, by 2050. The developing world is not just following the path trodden by the developed one, it is doing so at a dramatically faster pace, as the first chart shows.
In February of this year, projections by Standard Chartered suggested that, by 2050, the likes of South Korea, Singapore, Thailand and China would have a higher share of pensioners in their population than most developed countries, depicted in the second chart.
The latest analysis by the IMF points to the likelihood that Asian countries will be far poorer than developed ones when their working-age populations peak as a share of the total population. Indeed, in some countries such as China, Thailand, Vietnam and South Korea, this is not a prediction: it has already happened.
According to the Fund’s calculations, when the share of their working-age populations peaked, Australia, Japan, Germany, Italy, Canada, France and the UK all had per capita income of at least 70 percent of the level the US had at the same point, measured in terms of purchasing power parity. These peaks were reached between 1950 and 2009.
China’s working-age population peaked 2011 but its per capita income was just 20.7 percent of the US level. Thailand was a little wealthier, at 28.9 percent, when its working-age share peaked in 2013, but Vietnam was far poorer still, at 10.4 per cent of the US level, when it reached the same point a year later.
Malaysia, Indonesia, India and the Philippines are projected to be somewhat better off when they reach peak working-age share, probably between 2020 and 2056, but still some way below the income levels reached in the west, as the third chart shows.
"In past decades, Asia has benefited significantly from demographic trends. Many parts of Asia, particularly East Asia, reaped a ‘demographic dividend’ as the number of workers grew faster than the number of dependants, providing a strong tailwind for growth. This dividend is about to end for many Asian economies," wrote Ranil Salgado, division chief of the IMF’s Asia and Pacific department.
“Adapting to aging could be especially challenging for Asia, as populations living at relatively low per capita income levels in many parts of the region are rapidly becoming old.”
The IMF forecasts that population growth, already modestly negative in Japan, will fall to zero Asia-wide by 2050, as fertility rates, currently 1.98 children per woman, fall to 1.83 and rises in life expectancy slow, as indicated in the fourth chart.