Asia to be home to 60% of the world’s over 65s by 2030
- Demography is shifting the balance of power in Asia, according to Deloitte’s latest Voice of Asia report
- India will rise as an economic superpower, supplying more than half of the increase in Asia’s potential workforce over the coming decade
- By 2042 there will be more over-65s in Asia than the populations of the Eurozone and North America combined.
18 September, 2017 — Asia’s over 65s will be the largest and fastest growing market in the world, providing a target-rich environment of business opportunities, according to the third edition of Deloitte’s Voice of Asia series. Those in Asia aged over 65 will grow from 365 million in 2017 to more than 520 million in 2027. While this creates emerging challenges for economic growth in ageing nations, ageing populations will also generate a growth cluster of new business opportunities.
“Ageing populations may well be challenging to some nations, but they will also present some incredible business opportunities within those same nations. Our analysis shows ageing will produce some very large winners at the industry level, particularly in Asia,” said Chris Richardson, Deloitte Australia Economist.
The impact on Australia
The ‘where’ and the ’who’ of business opportunities in Asia are set to move sharply over the next decade. We’ve known for some time Australia’s ageing population will weigh on the nation’s growth over the next decade. What Australians may not realise is that:
- In the coming decade the impact of ageing on growth here in Australia will be greater than the matching impact in Japan – because Japan has already been through decades of challenge arising from ageing
- While Australia will have its challenges, those challenges will be much larger still in Hong Kong, Taiwan, Korea, Singapore, Thailand and New Zealand – as well as in China itself. That means that group of six nations, which together with Japan account for almost half of all Australia’s merchandise exports, will have to deftly navigate growth opportunities over the coming decade
- The good news is that there’s cavalry on the horizon. In particular, the likes of India, Indonesia and the Philippines will be on a demographic updraft at the same time as Asia’s existing Tigers enter a phase of slower growth.
“Rare among rich nations, Australia has a track record of welcoming migrants to our shores,” noted Ian Thatcher, Deputy Managing Partner, Deloitte Asia Pacific. “That leaves us less at risk of an ageing-related slowdown in the decades ahead.
“And we are also very well positioned to sell into the changing growth dynamic in Asia. Having ridden a massive wave with China and mining, the coming potential out of Asia will lie more in other countries and other sectors. Australian businesses in tourism, agribusiness, health care, education and wealth management will all see a tailwind of Asian demand in the years ahead.”
An ageing Asia to create a growth cluster of industry winners
More people, earning much more money – and keen to spend it. That’s the magic formula of industry opportunity opening up in an ageing Asia driven by three big accelerators:
- Asia is ageing fast, with a billion people in the region to be aged 65 and over by the middle of this century
- Money being spent by and on ageing populations will grow even faster than Asia ages, because the impact of new technologies and the on-going management of increasing chronic conditions means health care costs will rise faster than most other costs
- Private sector opportunities will grow even faster still, as stretched government budgets mean the share of health-related costs borne by taxpayers is likely to drop back in the decades ahead.
Tsuyoshi Oyama, Deloitte Japan Economist, notes that, “As is already increasingly evident in Japan, the surge in ageing-related opportunities will be evident well beyond health care. Rapid ageing in the Japanese population has changed the needs of people and the way businesses satisfy them. There has been increasing demand in sectors such as nursing, consumer goods for the elderly, age-appropriate housing and social infrastructure, as well as asset management and insurance.”
India’s rise as an economic superpower
Some nations will be well positioned to take greater advantage of these demographic opportunities. In particular, India is set to rise as an economic superpower, driven in part by demographic changes. Following the rise of Japan and then China in decades past, India will drive the third great wave of Asia’s growth. Its potential workforce is set to rise from 885 million people today to 1.08 billion people in the next twenty years, and it will remain above a billion people for half a century.
Anis Chakravarty, Deloitte India Economist explained; “India will account for more than half of the increase in Asia’s workforce in the coming decade, but this isn’t just a story of more workers: these new workers will be much better trained and educated than the existing Indian workforce, and there will be rising economic potential coming alongside that, thanks to an increased share of women in the workforce, as well as an increased ability and interest in working for longer. The consequences for businesses are huge.”
While the coming ‘Indian summer’ will last decades and have the largest impact on the world, India isn’t the only Asian economy set to surge. Indonesia and the Philippines have relatively young populations, meaning they’ll experience similar growth.
How countries can minimise the impact of ageing
Ageing isn’t new: Japan is already dealing with rapid ageing and its implications aren’t fully determined. Even India’s projected growth isn’t guaranteed. It needs the right institutional set-up to promote and sustain its growth, otherwise its rising population could cause increasing unemployment and social unrest.
A number of areas can be addressed to fuel Asia’s economic future:
- Raising retirement ages: Fewer jobs are labour-intensive these days, while rising life expectancies are encouraging longer working lives, and today’s higher incomes are also encouraging people to work for longer. Fostering these trends can help the economic growth of those nations at the forefront of ageing impacts – as is especially true of Hong Kong, Taiwan, Singapore, Korea and China
- More women in the workforce: Asia has far fewer women than men in paid work. Accessing that untapped people power is a direct lever with which ageing nations can boost their growth potential
- Welcome migrants: 2017 is a year in which the politics of migration remains contentious, but the economics of migration remain excellent. Those nations at risk of a demographic-driven growth slowdown should open further to immigration. Accepting young, high-skilled migrants can help ward off ageing impacts on growth, but the critical issue is whether policy—and property prices—will allow this immigration to happen at sufficient scale
- Increase productivity: Productivity is just as much a contributor to economic outcomes as demographics. Governments can focus on education and re-skilling the workforce as a way to bolster the growth opportunities offered by new technologies.
An ageing Asia will rewrite the playbook of businesses in Asia and around the globe – generating new opportunities by geography, such as India, Indonesia and the Philippines, and by industry, not just in health care, but also more widely.
More analysis and details on Voice of Asia series can be found here.