India is poised to emerge as an economic superpower, driven in part by its young population, while China and the Asian Tigers age rapidly, reports Bloomberg, quoting Deloitte LLP.
Currently, about one-third of India’s working age population is between 15-64. And this gives India a chance, better than China and Japan, to reap the benefits of its still young population.
The report specifically states that 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 percent of that age group globally by 2030.
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 885 million to 1.08 billion people in the next 20 years and hold above that for half a century.
India is expected to supply over half of the increase in Asia’s potential workforce in the coming decade, according to the report, which cites its young population, who won’t be getting older any time soon, as catalyst.
“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.
“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,’’Chakravarty added.
While the looming ‘Indian summer’ is expected to 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 aging 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 aging-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 1 billion people aged 65 and over by 2050. This will require raising retirement ages, which 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; and taking in migrants, that is accepting young, high-skilled migrants, which could help ward off ageing impacts on growth.
Aging nations could also boost productivity with education and re-training to bolster growth opportunities offered by new technologies.
There have been two waves of growth in Asia giving rise to two economic superpowers — Japan and China. Their success stories were written by their working population. While Japan saw its “people power” peak in the 1990s (owing to skilled workforce rather the number of it), China has recently started reaping its fruits.
For Japan, its peak potential workforce was 87.78 million in 1995. For China, the peak was in 2014 at 1.01 billion. Both the countries are now on a downward slope. Along with these, other Asian giants like Thailand, Singapore, Hong Kong, Korea and Taiwan are also mirroring China’s story.