With advancements in technology, mankind now has ways to extend life beyond that which nature allows.

This has led to an increase in the average lifespan, and even the option to artificially keep a person alive. This will obviously have a major impact on the global economy.

It’s usually considered a good thing when a person lives longer. They’re able to spend more time with their family, after all.

But from an economic perspective, it’s a headache to accommodate senior citizens while deciding whether to increase public spending on healthcare. An aging population now pressures entire governments and economies throughout much of East Asia and ASEAN.

To take countermeasures, an understanding of the factors which contribute to an aging population must be understood. These include not only better standards of living, but also low fertility rates.

Each individual country has their own unique obstacles as well. For example, the one child policy in China led to a steep fall in fertility rates.

The communist party already lifted the policy. However, Moody’s Analytics said that it’s extremely difficult to reverse fertility rates once they fall to a certain level. China’s fertility rate is the lowest in the world which will impact its future growth prospects.

Some countries, on the other hand, have realized the problem and took appropriate measures. Singapore has similarly low fertility rates, but pro-immigration policies have kept the city state’s population growth healthy.

The Singaporean government even launched an online dating portal aimed at helping professionals find love, eventually leading to higher birth rates. The country’s Social Development Network has personals on their website and holds matchmaking events.

 

World Bank Isn’t Optimistic About Global Economy

A report from the World Bank released at the end of 2015 warns an aging population will pose many risks. Korea, Thailand, China, and most notably Japan, are on the path to losing as much as 15% of their working-age population by 2040.

Much is at stake here. Asia’s elderly population will demand higher public spending. Pension spending in Asia will increase by at least 20% by 2070 without reform.

The regional vice president of the World Bank’s East Asia and Pacific Region, Axel van Trotsenburg, suggested that policy makers “consider comprehensive, proactive policies that will increase labor force participation, encourage healthy behaviors, boost productivity, reform social security, and ensure that public services are affordable.”

Governments aren’t just the ones feeling the pressure. Private companies will also be greatly impacted.

Julio Portalatin, the CEO of Mercer, spoke out and shared his thoughts on the subject. Governments would have to extend benefits for older workers in a “fiscally responsible” manner, according to Portalatin.

His suggestions include raising the retirement age so that an aging population does not affect the workforce too much. Other options include encouraging more women to join the workforce.

Portalatin’s recommends setting aside a portion of employees’ salaries as savings too. Workers could opt out if they wish. With such a plan, employees would have more awareness of their pension. This could lead to a higher percentage of salaries kept as savings.

An aging population is truly a worrisome ordeal. This is especially the case in East Asian countries where fertility rates are shrinking too. Governments and the private sector must work together to maintain their workforce.

With that said, there’s still ways to invest and profit from an aging global population.

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About Reid Kirchenbauer

Reid Kirchenbauer is the Founder of InvestAsian. He's an accomplished stock trader and property investor in Thailand, Cambodia, and many other places. He's been featured in publications such as Forbes, Nomad Capitalist, Property Report, and Seeking Alpha. Download his free investment guide by clicking here.

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