Will demographics alter power equations in Asia?

Over the coming decades, India will surpass China to emerge as the largest contributor to the global workforce. The country’s potential workforce is expected to touch 1.08 billion by 2037, estimates Deloitte in a new report. By 2050, it is projected to rise further to 1.12 billion. By comparison, China, whose workforce has already begun to age, had a working population of 1.01 billion in 2014. 

This trend could potentially alter power equations in Asia. “Demography — the fundamental driver of all economies — is shifting the balance of power in Asia,” says the report. The Deloitte Voice of Asia report series, that puts demographics in the spotlight, identifies three demographic shifts in Asia that have had far-reaching economic implications. 

The first wave began with the rise of Japan. But this wave peaked in the 1990s and Japan is now grappling with a rapidly ageing population. The second wave was the spectacular rise of China that “rewired the world economy more significantly than any other event since the industrial revolution.” But the tide has begun to turn. 

China, along with countries such as Vietnam and Australia will all “see their economies witness slower growth due to their ageing population”. The report argues that the third wave — the India wave — is now beginning. According to the report, India is expected to account for more than half of the incremental increase in Asia’s workforce over the coming decade. 

This will not only propel India’s growth but also “cement us (Asia) at the centre of the world’s economy and its growth,” says the report.  “India’s young economy is on the rise, Japan’s big budget deficits are being worsened by ageing, and both China and Australia are getting older at a speed that will re-fashion their business landscape,” it adds. 

Other economies such as Indonesia and the Philippines are also likely to surge on the back of demographics. “Both of these nations have a relatively young population, mainly because they still have birth rates in excess of the global average. This makes demographics a tailwind rather than a headwind for their growth across at least the next 20 years,” says the report.