Ageing population may hurt Singapore most
By Bryan Lee, Economics Correspondent
June 26, 2008
SINGAPORE may suffer the most among Asian economies from an ageing population, with the average growth in economic output falling more than 40 per cent over the next 25 years.
A new research report from Swiss banking giant UBS found that the Republic is set to be the world's third- fastest ageing nation, as the proportion of those aged 65 and above will double to 20 per cent in 2020.
This is a problem because of the decliine in the proportion of people who are economically productive.
In Singapore, factors such as a relatively low birth rate and high-quality health care, which helps people live longer, contribute to the ageing population.
But the UBS report, using United Nations data, found that four of the world's 10 fastest ageing populations are in Asia. Japan is in the No. 2 spot, followed by Singapore, South Korea and Hong Kong.
Mr Simon Smiles, who wrote the report, also said that China and Thailand are ageing more rapidly than Spain, France, Britain and the United States.
Beyond economic growth, the greying of Asia's populations is also likely to hurt public finances as mandatory public pension plans may become inevitable.
Assuming a similar programme to that in Australia, the Singapore Government, for instance, may be saddled with an additional expense equivalent to 7.6 per cent of GDP, said Mr Smiles.
The Australian scheme pays out benefits equivalent to 25 per cent of the average wage for those eligible.
But there may be a silver lining for investors.
Hospitals, medical equipment makers and drugmakers should benefit, said Mr Smiles, as the elderly generally spend more on health care than younger people.
Life insurance and asset management firms should also get a boost from a growing need for wealth management for retirement.
Investors could even look at putting money in the business of death, said Mr Smiles, who cited Sydney-listed funeral service provider InvoCare as a potentially strong investment.
Copyright © 2007 Singapore Press Holdings Ltd. Co. Regn No. 198402868E
Abridged
SOURCE: StraitsTimes
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Yes, ageing population is becoming a much talk about issue, globally. Whilst economists would inevitably talk about investments etc; every levels Government must put in place plans to tackle the challenges now and in the near future.
Perhaps the government of each country should get into the "funeral service" market.
Seriously, we all should have some input on this discussion. This is everybody's issue! Unless you are certain you would not reach old age.
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