The Asia-Pacific region is experiencing a significant demographic shift as several countries are aging at a rapid pace. This transition is not unique to the region but is a global megatrend that is reshaping economies and societies worldwide. The speed at which the aging process is progressing in countries like China, Singapore, Thailand, and Vietnam is unprecedented, with the transition from an aging society to an aged society expected to take only 19 to 25 years, compared to much longer timelines in other parts of the world.
Demographic shifts have a profound impact on economies as they fundamentally alter the essence and purpose of economic activities. As the population ages, there are changes in productivity, labor force participation, consumption patterns, and fiscal policy effectiveness. Analysts struggle to quantify the economic impact of aging because it is a complex interplay of multiple factors working in opposing directions. While productivity tends to decline as people age, technological progress can offset this trend to some extent, making the net impact difficult to predict.
The Economic and Social Survey of Asia and the Pacific 2024, prepared by the United Nations Economic and Social Commission for Asia and the Pacific, highlights how demographic shifts are reshaping economies in the region and impacting fiscal policy and overall development agendas. One of the key challenges posed by aging societies is the lower share of working-age people, which affects the size of the economic pie and the redistribution of goods and services through taxes and fiscal expenditures.
Governments have a range of tools at their disposal to address the negative impact of demographic shifts and promote positive processes. For example, reskilling and upskilling older workers can help retain them in the workforce, increase economic output, and reduce poverty among the elderly. Implementing policies that support healthy and active aging, drawing on experiences from countries like Japan, can also alleviate the fiscal burden of pension systems by postponing retirement.
A holistic approach to policymaking is essential to address the challenges posed by aging populations. Governments should seek synergies between different policy goals, such as investing in healthcare, education, social protection, and environmental protection, to improve the quality of life, support economic activity, and reduce public spending needs. By aligning policies to support multiple development priorities simultaneously, governments can maximize the impact of their interventions and create a more sustainable and inclusive society.
In conclusion, the aging of populations in the Asia-Pacific region presents both challenges and opportunities for policymakers. By understanding the complex interplay of factors shaping demographic shifts and adopting a holistic approach to policy planning, governments can navigate the economic impact of aging populations and promote sustainable development for all members of society.