- Demography — the fundamental driver of all economies — is shifting the balance of power in Asia, according to Deloitte’s Voice of Asia report:
- By 2042 there will be more over-65s in Asia than the populations of the Eurozone and North America combined.
- This will provide a target-rich environment of business opportunities, focused on a growth cluster targeting megatrends such as rising life expectancies, increasing relative health care costs, and tightening public sector budgets.
- India will rise as an economic superpower, supplying more than half of the increase in Asia’s potential workforce over the coming decade.
Asia’s over 65s are the largest and fastest growing market in the world, providing a target-rich environment of business opportunities, according to Deloitte, who today released the third edition of their Voice of Asia series. Those in Asia aged over 65 will grow from 365 million in 2017 to more than 520 million in 2027. While this creates emerging challenges for ageing nations, ageing populations will also generate a growth cluster of new business opportunities.
“Ageing populations may well be challenging to some nations, but they will also present some incredible business opportunities within those same nations. Our analysis shows that ageing will produce some very large winners at the industry level, particularly in Asia,” said Chris Richardson, Deloitte Australia Economist.
Ageing to create a growth cluster of industry winners
Three big accelerators drive the industry opportunities in an ageing Asia, with each building on the other:
Asia is ageing fast, with a billion people in the region to be aged 65 and over by the middle of this century.
And the money being spent by and on ageing populations will grow even faster than Asia ages, because the impact of new technologies and the on-going management of increasing chronic conditions means health care costs will rise faster than most other costs.
Finally, private sector opportunities will grow even faster still, because stretched government budgets mean the share of health-related costs borne by taxpayers is likely to decrease in the decades ahead.
“Ageing populations in Southeast Asia is driving up the demand for healthcare. Everything from diagnosis, drugs to devices, will have to evolve together with the shift in demographics. There is an ever-pressing need for a robust healthcare system to cope with the changing needs of patients.” Dr Loke Wai Chiong, Deloitte Southeast Asia Healthcare Sector Leader and Executive Director at Deloitte Risk Advisory commented.
“Despite the challenges of a rapidly ageing population, digital and technology-enabled healthcare solutions can help mitigate care access challenges and enhance the patient experience. Healthcare systems in the region should continue to innovate to deliver higher value health care and to rein in rising healthcare costs,” Dr Loke said.
Tsuyoshi Oyama, Deloitte Japan Economist, notes that, “As it is already increasingly evident in Japan, the surge in ageing-related opportunities will be evident well beyond health care. Rapid ageing in the Japanese population has changed the needs of people and the way businesses satisfy them. There has been increasing demand in sectors such as nursing, consumer goods for the elderly, age-appropriate housing and social infrastructure, as well as asset management and insurance.”
India’s rise as an economic superpower
Some nations will be well positioned to take greater advantage of these demographic opportunities. In particular, India is set to rise as an economic superpower, driven in part by demographic changes. Following the rise of Japan and then China in decades past, India will drive the third great wave of Asia’s growth. Its potential workforce is set to rise from 885 million people today to 1.08 billion people in the next twenty years, and it will remain above a billion people for half a century.
Anis Chakravarty, Deloitte India Economist explained that, “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, and 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 coming ‘Indian summer’ will last decades and have the largest impact on the world, India isn’t the only Asian economy set to surge. Indonesia and the Philippines have relatively young populations, meaning they’ll experience similar growth.
Malaysia, as a more developed economy than India, Indonesia and the Philippines, is hitting its demographic peak, and is set to ride the crest of a wave that has been building over the past 50 years. In 1965, barely one in two Malaysians were of working age. Now that ratio is peaking at close to 70 percent. Malaysia’s total population is expected to grow by more than 75 percent from 19 million as recently as a quarter of a century ago to nearly 34 million in 2022. In addition, the population aged 65 and above is projected to more than triple over that time, from 700,000 to over 2.5 million, to reach 7.5 percent of the total population.
“Compared to a number of nations, the impact of ageing on Malaysia’s economic growth is relatively gentle and will not really be felt until the 2050s. Our economy will avoid many of the more challenging downsides of population ageing for some time yet, although those challenges will eventually arrive here too,” said Cheryl Khor, Deloitte Malaysia Risk Advisory Leader. “Nonetheless, the need for Malaysia to improve geriatric health care options is rising and so is the demand for insurance to accommodate the aged; this will in turn lead to growing aging-related opportunities for the country.”
How countries can minimise the impact of ageing
Ageing isn’t a new issue: Japan is already dealing with a rapidly ageing population and its implications aren’t fully determined. Even India’s projected growth isn’t guaranteed. It needs the right institutional set-up to promote and sustain its growth, otherwise its rising population could cause increasing unemployment and consequent social unrest.
A number of areas can be addressed to fuel Asia’s economic future:
Retirement ages can rise: Fewer jobs are labour-intensive these days, while rising life expectancies are encouraging longer working lives, and today’s higher incomes are also encouraging people to work for longer. Fostering these trends can help the economic growth of those nations at the forefront of ageing impacts – as is especially true of Hong Kong, Taiwan, Singapore, Korea and China.
More women in the workforce: Asia has far fewer women than men in its paid workforce. Accessing that untapped people power is a direct lever with which ageing nations can boost their growth potential.
Welcome migrants: 2017 is a year in which the politics of migration remains contentious, but the economics of migration remain excellent. Those nations at risk of a demographic-driven growth slowdown should open further to immigration. Accepting young, high-skilled migrants can help ward off ageing impacts on growth, but the critical issue is whether policy—and property prices—will allow this immigration to happen at sufficient scale.
Increase productivity: Productivity is just as much a contributor to economic outcomes as demographics. Governments can focus on education and re-skilling the workforce as a way to bolster the growth opportunities offered by new technologies.
An ageing Asia will rewrite the playbook of businesses in Asia and around the globe – generating new opportunities by geography, such as India, Indonesia and the Philippines, and by industry, not just in health care, but also more widely.
Source: Media Release