SEOUL • The chief of the International Monetary Fund (IMF) warned yesterday that ageing populations in key Asian economies will drag on their growth, urging policymakers to step up their response to shifting demographics.
Studies show that Asia's population is ageing faster than anywhere else in the world, with Japan forecast to become the first "ultra-aged" country, meaning 28 per cent of the population is 65 years or over, while a fifth of the people in South Korea are expected to be 65 by 2030.
Rapidly ageing countries, including China, Japan, Korea and Thailand, "will have smaller workforces in the future and potentially lower productivity growth", IMF managing director Christine Lagarde told a conference in Seoul.
"These countries could face lower annual GDP growth... by up to a percentage point," she said.
China and Japan are the second- and third-largest economies respectively, and their slower growths risk significant knock-on effects around the world.
Singapore will be among worst hit by a shrinking workforce due to an ageing population, with labour supply forecast to decline by 1.7 percentage points in the 10 years through 2026, Oxford Economics warned on Wednesday.
Ms Lagarde urged governments to "boost the proportion of women in the workforce" by better accommodating working mothers with more childcare benefits and incentives for part-time work.
In emerging countries such as India - where populations are still growing - better education for girls and wider access to finance for women should be prioritised, she said.
According to some estimates, she added, closing the gender gap in the employment market could raise Japanese GDP by 9 per cent, South Korea's by 10 per cent, and India's by 27 per cent.
At the conference yesterday, Bank of Korea governor Lee Ju Yeol also called for steps to tackle low birth rates and create more jobs for women and older people.
"A failure in responding to population ageing will make the escape from possible structural low growth difficult," Mr Lee said.