The fu­ture is (get­ting) old

Financial Mirror (Cyprus) - - FRONT PAGE -

Last year, the OECD warned that the world was ag­ing at an un­prece­dented rate and that this could help slow global an­nual eco­nomic growth from an av­er­age of 3.6% this decade to about 2.4% from 2050 to 2060. OECD coun­tries in par­tic­u­lar will be hit by a dou­ble de­mo­graphic shock. Not only will their so­ci­eties be rapidly ag­ing; di­min­ish­ing in­come gaps be­tween rich coun­tries and emerg­ing economies are likely to slow immigration flows, shrink­ing the work­force by 20% in the eu­ro­zone and 15% in the United States.

De­mo­graphic re­searchers di­vide coun­tries into four cat­e­gories, ac­cord­ing to the share of the over-65 pop­u­la­tion: young (less than 7% aged 65 or over), ag­ing (7-13%), aged (14-20%), and su­per-aged (more than 21%). To­day, just three coun­tries – Ger­many (21%), Italy (22%), and Ja­pan (26%) – qual­ify as su­per-aged so­ci­eties. In the next five years, they are ex­pected to be joined by Bulgaria, Fin­land, Greece, and Por­tu­gal. In the fol­low­ing decade, Europe will con­tinue to age, with another 17 coun­tries, in­clud­ing Aus­tria, France, Swe­den, and the United King­dom, ex­pected to be­come su­per-aged, along with Canada, Cuba, and South Korea.

Dur­ing this pe­riod, the chal­lenges of rapid so­ci­etal ag­ing will con­front mainly the de­vel­oped world. But, by 2040 some 55 coun­tries will be strug­gling to man­age an older pop­u­la­tion, with the US, China, Sin­ga­pore, Thai­land, and Puerto Rico join­ing the ranks of the su­per-aged.

What makes the phe­nom­e­non even more re­mark­able is the speed at which these tran­si­tions are tak­ing place. When France went from be­ing a young coun­try to an ag­ing one in 1850, slav­ery was still le­gal in the US, the light bulb had yet to be in­vented, and Ger­many had yet to be­come a uni­fied coun­try. It took another 130 years, for the coun­try to be­come an aged so­ci­ety in 1980. France is ex­pected to be­come su­per­aged in 2023.

For many years, Ja­pan was con­sid­ered to have the most rapidly ag­ing pop­u­la­tion on earth. It went from hav­ing the youngest pop­u­la­tion among G-7 coun­tries in the early 1960s to be­ing the world’s old­est coun­try in 2008. But if cur­rent pro­jec­tions hold true, sev­eral coun­tries will ac­com­plish a sim­i­lar trans­for­ma­tion a decade faster.

In­deed, to­day the world’s most rapidly ag­ing coun­try is South Korea, which be­came an ag­ing so­ci­ety in 1999, is ex­pected to be­come an aged one in 2017, and will be a su­per­aged one in 2027. In other words, South Korea will un­dergo in less than three decades a trans­for­ma­tion that will have taken France nearly 175 years. And while South Korea may be get­ting old the fastest, it leads a closely bunched group of coun­tries that in­cludes Bangladesh, Sin­ga­pore, Thai­land, and Viet­nam.

Iran, still cat­e­gorised as young, is another con­tender for the ti­tle of fastest-ag­ing coun­try. Ag­ing is a prod­uct of ris­ing life ex­pectan­cies and fall­ing fer­til­ity rates. The speed of the de­cline in fer­til­ity rates has been dra­matic around the world; in Iran, it has been noth­ing less than as­ton­ish­ing, drop­ping from seven chil­dren per woman in 1984 to 1.9 in 2006. This will cer­tainly have long-term con­se­quences as the workingage pop­u­la­tion declines and the el­derly pop­u­la­tion soars. Iran is ex­pected to stay young un­til af­ter 2020, but could then be­come su­per-aged less than 30 years later.

And yet, what­ever the ad­verse eco­nomic im­pact of ag­ing, it is im­por­tant to con­sider the al­ter­na­tive. Coun­tries such as Sierra Leone, Le­sotho, Cen­tral African Re­pub­lic, and Zim­babwe have among the low­est life ex­pectan­cies on the planet. They face many chal­lenges – famine, cor­rup­tion, con­flict, lack of ac­cess to clean wa­ter and ed­u­ca­tion, AIDS, and Ebola – but rapid so­ci­etal ag­ing is not one of them. A rapidly ag­ing pop­u­la­tion may be a prob­lem, but, over­all, it is a pretty good prob­lem to have.

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