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The threat of ageing population on world' top economies
I think about demographics a lot as it plays a huge role in economic development (or at least has had over the years)
Some countries are ageing more rapidly than others.
In some of the major economies like Japan, South Korea and Italy, dependency ratio is projected to increase very quickly, driven by increase in elderly population as well as a decline in working age population.
For example, in Japan by 2050, for every 100 people in age 15-64 (working age), there will be 71 elderly people (age 65+). This number is approx. 66 for both Italy and South Korea (almost 2.6x global avg)
Some of the economic implications of having a high proportion of elderly dependents can be quite severe and far reaching:
- Decrease in tax revenue for Government
- Stretched govt services such as state healthcare (e.g. NHS in UK) impact coverage and/or quality
- Increase tax rate on working population to support govt. finances
- Lower pension payouts to retirees
- Decrease in the competitiveness of the country in the global economy
Huge challenge for policymakers going forward.
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