Last updated August 22nd, 2023.
A detailed report by the International Monetary Fund (IMF) predicts the Philippines will soon have the youngest population in Asia.
They likewise suggested the country diversify its key services and manufacturing sectors and enhance workforce productivity in order to maintain its status as one of the fastest growing economies in Asia.
The Philippines: Asia’s Youngest Population
Unfortunately, the full story about the Philippines’ demographic boom isn’t all good news.
Favorable demographic trends are great for anyone investing in the Philippines, whether they’re individuals or businesses.
“In the next 30 to 40 years, the Philippines is going to be the youngest nation in Asia. That’s a huge opportunity … not only because we’re young, but it’s also because others are going to be old, especially our neighbors in Asia,” said Shanaka Peiris, representative of the IMF.
“That’s a big opportunity. But that alone will not be enough because a demographic dividend would need jobs. We have to create the jobs.”
Indeed, other economic problems in the Philippines are lurking beneath the surface.
The Philippines is primed to grow from its current population of 115 million to over 150 million by 2050. A big question remains though: will they be employed?
… But They’re Jobless
Currently, the Philippines is the second most populous country in ASEAN.
The nation rebounded from the latest economic crisis quicker than most other countries in developing Asia, with its recent GDP expansion of 5.7% ranking alongside the region’s strongest.
High unemployment remains one of the biggest structural problems in the Philippine economy. While the unemployment rate has improved recently, it’s still excessive at 5.4%. Granted, that’s an improvement compared to 7.3% about a decade ago in 2013.
Development in the private sector is the answer to the problem. According to Peiris. “We need the private investment to fall in line. We need the demographic dividend by creating jobs. That’s where we need to diversify the economic sector.”
Demographic “Problems” Are Worth Overcoming
Nonetheless, the Philippines enjoys a better economic outlook compared to some other places in the region. A few Southeast Asian countries show a trend of continuous aging.
Perhaps Thailand is the most unfortunate case with an average age of 41 despite the fact that it hasn’t even come close to breaching the middle income trap yet.
Several other countries in ASEAN that, at least presently, seem safe from a demographics angle will be under pressure within the next few decades.
In Malaysia, for example, the population of those aged 65 and older will triple from its current number by 2040.
Meanwhile, Vietnam’s average birthrate rapidly declined from 6.4 children per mother during the 1960s to just 2.02 in 2023. They’ll soon face an aging crisis because of this.
The negative effects of an aging populace in these emerging markets will take a while to appear, yet they’ll likely surface within your lifetime.
By comparison, the Philippines will have the entire 21st century to reap the rewards from its demographically-driven boom. Yet they’ll need to continue creating jobs to solve an ongoing labor shortage.
The point here is: it’s better to enjoy the benefits of strong demographic trends in the first place than not at all.
Ultimately, the Philippines’ demographic dividend is a net positive and puts them in a far better position when compared to elsewhere. Yet it also means dealing with a unique set of challenges.
Want to invest in the Philippines? You may be interested to read our full guide to buying property here.
