India, Philippines to lead Asian growth as workforces rise

by David Roman

For a vivid illustration of why demographics matter so much for economic growth, take a look at the diverging trends in Asia.

India and the Philippines are likely to post Asia’s fastest economic growth rates in coming years as their working-age population keeps expanding through 2020, in contrast with shrinking workforces across North Asia, Nomura Holdings estimates show.

Philippines, with 31 percent of its population currently under the age of 15, is projected to see a 1.9 percent expansion of its 15-to-65 year-old population this year, with Malaysia’s due to rise 1.6 percent and India 1.5 percent, Nomura economists said in a report. Malaysia’s population growth, however, is expected to slow faster than India’s.

That contrasts with bleaker prospects for the likes of China, Japan and Hong Kong, all of which have seen a contraction in the workforce since 2015. South Korea and Thailand are expected to join the ranks of older economies with a smaller working-age population next year, according to Nomura.

Aging will clip the potential growth rates of all major North Asian economies in coming years, while those of India and Southeast Asian economies may accelerate, with the exception of Singapore’s, the bank said.

“We expect any upside surprises to the consensus of economists on potential output growth to come from India and Southeast Asia, while any disappointments are likely to come from Northeast Asia,” Nomura said.