Rapid aging in Singapore could halt economic growth by 2030: Moody’s
Singapore will be a ‘super-aged’ society in just 15 years.
Singapore’s rosy economic outlook is at risk from the country’s greying population. A report by Moody’s Investors Service today revealed that economic growth could come to a standstill in the near future thanks to the country’s rapidly aging population.
Moody’s report, entitled “Population Aging Will Dampen Economic Growth over the Next Two Decades”, notes that the unprecedented pace of aging will impose a demographic tax that will slow economic growth over the next 20 years in both developed and emerging market economies, as working-age populations shrink and household savings rates decline.
Singapore is one of the countries that expects the speediest aging, as growth in working-age population will slow from a robust 48.1% in 2000-15 to a mere 3.8% in 2015-30.
The largest decline in growth is expected in China, Hong Kong, Korea, and Singapore. Overall, The Conference Board estimates indicate that aging will lead to aggregate annual growth for the 55 countries falling by 0.4 pp during 2014-19 and by 0.9 pp during 2020-25 from the 1990-2005 average growth rate of 2.9%.
Moody’s notes that by next year, over 60% of Moody’s-rated countries will be aging, with more than 7% of their population aged 65 or over. By 2020, super-aged societies (populations with more than 20% elderly) will increase to 13 globally from three today (i.e., Italy, Germany and Japan). By 2030, 34 countries will be super-aged, including Singapore.
“Demographic transition, frequently considered a long-term problem, is upon us now and will significantly lower economic growth,” says Elena Duggar, a Moody’s Senior Vice President and one of the authors of the report. “Estimates show that aging will reduce aggregate annual economic growth by 0.4 percentage point in 2014-19 and by a much larger 0.9 percentage point in 2020-25.”