Friday, July 21, 2017

Getting Old Before They Get Rich

An aging population will slow China's rapid growth rate:

As China’s labor force becomes smaller and older, the country’s potential economic growth rate will decline. The IMF’s research into population aging finds that a larger share of older workers in the labor force means lower productivity, but also lower labor force participation, which will ultimately reduce China’s potential economic growth rate by between 0.5 percent and 0.75 percent per year between 2020 and 2050.

This is one factor of many that explains why forecasters like the OECD are expecting China’s growth to slow from 6.6 percent on average between 2011 and 2030 to 2.3 percent per year between 2030 and 2060.

The costs of taking care of an aging population will hit at the other side of the ledger.

Dealing with China's basic problems without an advanced economy will be a problem.

Which is why I haven't panicked about China's (for now) rise.