Population aging in China (A1 stable) and other emerging markets in Asia will hurt economic growth, competitiveness and fiscal revenue, unless productivity gains accelerate, according to a new report by Moody’s Investors Service.
And although China’s new policy allowing couples to have up to three children could support fertility, it is unlikely to dramatically change the national birthrate, meaning that aging will remain a credit-negative constraint.
- Shrinking workforces could dampen rapid GDP growth and hurt fiscal revenue in China, Thailand and other economies
- In China’s case, productivity gains may lessen the credit-negative impact of demographic changes
Thailand’s (Baa1 stable) total dependency ratio is set to jump nine percentage points to 51% by 2030 – a faster increase than China’s – which will pressure public and private savings through higher taxes and social spending, reducing innovation and productivity gains.
In China, by contrast, Moody’s expects that innovation in artificial intelligence, logistics and biotech could help to increase productivity, mitigating the economic drag from aging.
“Additionally, contending with an aging population at a relatively early stage in their economic development will increase the challenge for emerging market governments in addressing this issue,” adds Petch.
The experiences of some of Asia’s advanced economies in tackling demographic challenges illustrate the ability of policy to mitigate related credit pressures – as well as its limitations. In Japan (A1 stable), for example, pension reforms and the expansion of child and nursing care, among other measures, have led to increased senior and female workforce participation. However, the fertility rate continues to fall.
Subscribers can access the report “Sovereigns – Asia Pacific: China’s new childbirth policies highlight demographic risks in emerging Asia” at: http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1281250
Thailand relaxes COVID-19 measures to help revive economy
During the past couple weeks, new infection cases have been down from roughly 20,000 daily cases to 17,000 -19,000. Moreover, the number of daily discharges is exceeding infections, which has led to the conclusion that the situation is improving.
Thailand relaxed more virus related social curbs on September 1st, in dozens of cities including Bangkok, in a move that may indicate that the country’s economy, hit hard by COVID-19 will soon revive, lead by the export sector and sound financial fundamentals.(more…)
Southeast Asia to relinquish its lead over Latin America says Moody’s
While the emerging economies of Southeast Asia have outperformed their counterparts in Latin America for most of the past two decades, their lead will slide in the next few quarters as Southeast Asian governments clamp down to fight the pandemic’s lingering second and third waves.
The Delta surge is casting larger clouds over the global recovery and emerging markets are in the thick of it. Despite the ebbing of the coronavirus variant in India, where it first emerged, its spread in Southeast Asia, Africa, and the Middle East has steepened the road to recovery in these regions.(more…)
Thailand Raises Public Debt Ceiling from 60% to 70% of GDP
Thailand’s State Monetary and Fiscal Policy Committee has decided to raise the ceiling of the public debt-to-GDP ratio from 60%...
Thailand Approves Package to Attract Wealthy Foreigners and Professionals
Thailand’s Cabinet has approved an economic stimulus and investment promotion package aimed at attracting wealthy foreigners and highly skilled professionals...
The Role of Telemedicine Today: During and Beyond the COVID-19
Lockdowns, quarantine periods, and hospitals fast filling to the brink needed the medical community to come up with solutions fast....
Malaysia, Thailand banks to join the ASEAN Banking Integration Framework
Banking institutions from Thailand and Malaysia are invited to join the ASEAN Banking Integration Framework and indicate their interest to...
Climate Change Could Force 49 Million People to Migrate in East Asia and the Pacific
Out-migration hotspots in agricultural areas of central Thailand and Myanmar coincide with areas expected to see declines in both water...