The Philippines’ large and young population will keep the economy growing faster than its Asian neighbors over the next 25 years, a Singaporean bank said Thursday.
DBS Bank of Singapore said in a report that within the Asian region, the Philippines and India would benefit the most from their large working-age populations.
“The proportion of those of working age in the total population is peaking in many countries as we speak—or indeed peaked a couple of years ago. This share will fall sharply in the coming years throughout most of Asia, Japan, Europe and the US,” DBS said.
DBS, citing data from the United Nations, said sharp population growth declines were already being seen in China, Korea, Hong Kong, Taiwan and Singapore and would likely continue for another 25 years.
“Within Asia, only India and the Philippines will be spared, though Indonesia’s working age share should at least remain stable for another decade,” DBS said.
The median age in the Philippines is estimated at 23 years, or just half of Japan’s 47 years, data showed.
Bangko Sentral Governor Amando Tetangco Jr. earlier said the Philippines was entering a demographic window, a period when a significant portion of the population was of working age. “Studies have shown that countries that have entered this have enjoyed an average GDP growth rate of 7.3 percent within the first 10 years of their entry to the window. Together with the economy’s strong fundamentals and investments in human capital, we expect the country’s entry to the demographic window to help accelerate growth in 2016 and succeeding years,” Tetangco said earlier.
DBS said there was a clear link between working age population and economic growth. “The implications for potential growth are clear. If population growth is falling and the population is getting older at the same time, it must mean that the growth in working age population is falling even faster than the total. And it’s the latter that matters to potential GDP growth because, well, it’s the working age guys and gals who go to work everyday,” the Singaporean bank said.
According to the latest (2015) revision to the United Nations’ World Population Prospects, China’s population growth fell to a mere 0.5 percent in 2015 from 1.25 percent in 1996 and 1.9 percent in 1990.
“US population growth is barely faster than China’s, having dropped to 0.75 percent in 2015 from 1.25 percent in 2000. Especially notable is Japan, where population growth fell below 0.5 percent in 1990, below zero in 2010 and is currently running at a rate of negative 0.2 percent per year,” the bank said.
DBS said back in 1975, the median age in China was 20, which was now double today. It said the median age in 10 largest Asian economies also doubled to 40 from 20 in 1975.
By country, the median age is 47 in Japan, 44 in Hong Kong and 41 in Singapore and Korea. In all four countries, the median age were seven to nine years higher than in 2000.
“Plainly, older populations mean fewer workers are bringing home the bacon for everyone else. Not only is there ‘less to go around’ but that typically means less is saved and invested too. Less investment means less growth, end of story. In the jargon, the ‘demographic dividend’ from expanding populations in decades past is now running in reverse,” DBS said.
The Philippine economy expanded 5.8 percent in 2015, making it one of the fastest-growing in the Asian region.
Former National Economic and Development Authority director-general Arsenio Balisacan said efforts to improve human capital formation and to foster technological growth and innovation
should be intensified to take advantage of the country’s young population.
He said the Philippines’ large population of educated, skilled, and competitive young workers and professionals would serve an important role in the booming economy.