“Source: The Times of India”
NEW DELHI: The G20 nations, representing 85% of global gross domestic product between them, are for the first time discussing ageing and shrinking birth rates as a global risk. G20 finance ministers and central bank chiefs meeting in Japan — where a rapidly ageing population is a major domestic problem — have been warned to address the issue before it is too late.
“What we are saying is, ‘If the issue of ageing starts to show its impact before you become wealthy, you really won’t be able to take effective measures against it’,” Japanese finance minister Taro Aso, the meeting’s host, told reporters late Saturday.
What’s the risk? As people live longer and birth rates fall, it leads to a shrinking labour force, which means firms are unable to fill job openings and this, in turn, affects output and also new investment opportunities in the economy.
Meanwhile, age-related spending like for pensions and health systems keeps rising and the shrinking workforce (and new investments) makes it even more difficult to cover the cost of pension. By 2050, the world is projected to have more than two billion residents aged 60 and above, more than double the number in 2017. But many economies haven’t updated their pension and employment systems to adjust to the changing demographics.
What about India? India is greying faster than previous projections but still fares better than countries like China. During 2000-2050, while the overall is expected to grow by 56% (to about 320 million), the 60-plus population will increase by 326% and the 80-plus population will grow 700%.
The opportunity: To prepare for the rising economic burden of the elderly, countries with rapidly ageing populations will need to save more now and the best investment opportunities for them are younger populations like India. So, the capital from some of these ageing but rich countries will find its way to capital-scarce but young countries benefiting both.