Presenter: Umang Rawat - Economist
Asia & Pacific Department
The demographic trend is turning in Asia. In past decades, the region has benefitted significantly from demographics, along with strong policies. Many parts of Asia, particularly East Asia, reaped a demographic dividend as the number of workers grew faster than the number of dependents. This dividend is about to end in many Asian economies. This study assesses the implications of Asia’s demographic transition for growth, capital flows, and financial market. In terms of growth, aging is likely to be a headwind for Asia despite the diversity within the region—East Asia is the fastest aging area in the world, while parts of South and Southeast Asia can reap significant demographic dividends. Our preliminary findings suggest that current account surpluses of some Asian economies could persist due to demographics. We also find that domestic real interest rates are likely to decline due to demographics, while global factors are likely to play a larger role in financially open economies. Adapting to aging could be especially challenging for Asia given its rapid aging, which calls for addressing macroeconomic imbalances early on and structural reforms in the areas of labor markets, pension systems, and retirement plans.
Moderator: Mala Narain
Communications Department
