Thailand may be stuck in the middle-income trap for a while unless it takes action now as the country is fast becoming a “hyper-aged” society, warned a British bank.
A hyper-aged society is defined by the United Nations as those in which seniors make up more than 21% of the population.
Standard Chartered Bank said in a statement on Wednesday Asia was getting old much faster than Europe and the US did last century.
“This means that some countries in Asia, such as Thailand and China, will grow old before they get rich. These countries need to find ways to manage their already rapidly ageing populations or they will end up stuck in the middle-income trap,” said Samantha Amerasinghe, an economist at the bank.
The report foresaw Thailand becomes hyper-aged by 2035, about the same time as China.
“After decades of enjoying a demographic dividend, China, Korea, Hong Kong and Thailand will start to see an economic drag from ageing before 2020, and Singapore before 2025,” the report said.
Korea and Singapore are already ageing, which means that between 7% and 14% of the population is 65 and over. By 2030, more than one in five Koreans and Singaporeans will be seniors, making the countries statistically hyper-aged, like the UK and Germany.
Attempts to raise fertility rates across Asia have so far proven unsuccessful. For the major economies, including China, Thailand, Japan, Singapore and Korea, fertility rates remain well below the 2.1 it would take to replace the current population.
The report suggested governments invest more in education. “By making even modest improvements in the quality of labour through investing more in education, China could postpone the effect of ageing on economic growth by as much as 10 years.”
While a good pension system, health care and social security would help mitigate the impact of ageing, the biggest result could come from raising female participation rates in the labour market such as child-care subsidies and allowances and employer incentives to become more family-friendly, the report said.
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