India to replace China as Asia's growth engine thanks to young population
Country's worforce to grow to over a billion people by 2020
India is poised to emerge as an economic superpower, driven in part by its young population, while China and the Asian Tigers age rapidly, according to Deloitte.
The number of people aged 65 and over in Asia will climb from 365 million today to more than half a billion in 2027, accounting for 60 per cent of that age group globally by 2030, Deloitte said in a report Monday. In contrast, India will drive the third great wave of Asia’s growth – following Japan and China - with a potential workforce set to climb from 885m to 1.08bn people in the next 20 years and hold above that for half a century.
"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," said Anis Chakravarty, economist at Deloitte India.
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"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 looming ‘Indian summer’ will last decades, it isn’t the only Asian economy set to surge. Indonesia and the Philippines also have relatively young populations, suggesting they’ll experience similar growth, says Deloitte. But the rise of India isn’t set in stone: if the right frameworks are not in place to sustain and promote growth, the burgeoning population could be faced with unemployment and become ripe for social unrest.
Deloitte names the countries that face the biggest challenges from the impact of ageing on growth as China, Hong Kong, Taiwan, Korea, Singapore, Thailand and New Zealand. For Australia, the report says the impact will likely outstrip that of Japan, which has already been through decades of the challenges of getting older. But there are some advantages Down Under.
"Rare among rich nations, Australia has a track record of welcoming migrants to our shores,” said Ian Thatcher, deputy managing partner at Deloitte Asia Pacific. “That leaves us less at risk of an ageing-related slowdown in the decades ahead."
Japan’s experience shows there are opportunities from ageing, too. Demand has risen in sectors such as nursing, consumer goods for the elderly, age-appropriate housing and social infrastructure, as well as asset management and insurance.
But Asia will need to adjust to cope with a forecast 1bn people aged 65 and over by 2050. This will require:
- Raising retirement ages: Encouraging this could help growth in nations at the forefront of ageing impacts.
- More women in the workforce: A direct lever that ageing nations can pull to boost their growth potential.
- Taking in migrants: Accepting young, high-skilled migrants can help ward off ageing impacts on growth.
- Boosting productivity: Education and re-training to bolster growth opportunities offered by new technologies.
Updated: September 18, 2017 09:07 AM