Grant Thornton: Survey identifies ageing populations as greatest threat to business growth prospects in Asia-Pacific

Grant Thornton’s new report, the future of Asia-Pacific, reveals that businesses leaders across the Asia-Pacific (APAC) region believe the ageing populations pose the single biggest challenge to their future operations. The threat of rising dependency ratios was of greater concern than regional conflict and the slowdown in China’s economy across the region, according to the report.

Ageing populations’ threat

In the survey of 700 business leaders across the APAC region, 42% of APAC business leaders believe ageing populations to be a major threat, ahead of the regional conflict due to competing territorial claims (40%) and the rebalancing of China’s economy (39%). The results support the United Nations population projections which identify 2015 as a tipping point after which the proportion of the population in Asia-Pacific dependent on those in work will begin to rise. This marks the end of the ‘demographic dividend’, where people of working age are supporting relatively fewer dependents, boosting growth prospects.   For the businesses of China mainland, 50% of business leaders worry about threat of aging populations, higher than job losses led by automation of simple businesses processes and other threats. According to China National Committee on Aging (CNCA), China will step into the rapid aging period. The aging population will increase to 418 million in 2035 from the current 212 million in 2015. It will account for 29% of the whole population then.

Xu Hua, CEO of Grant Thornton China, says: “The impact of an ageing population is a big issue for development of Asia-Pacific business. This is because –apart from India and Indonesia – birth rates are falling across the region. More elderly people put an increasing strain on public services such as healthcare. It shrinks the talent pool available to businesses. Moreover, if demand for skilled workers outstrips supply, labour costs will also go up, possibly resulting in loss of the region’s competitive advantage as a low-cost base for manufacturing. Now governments across the region are striving to solve the problem. The removal of the one-child policy in China is an important initiative to deal with the aging population.”

Development opportunities for APAC region

According to the survey, business leaders in APAC region cited increased ASEAN economic cooperation, China’s “Belt and Road” initiatives, scaling up the Asian Infrastructure Investment Bank and the Trans Pacific Partnership as the biggest opportunities for the Asia-Pacific region over the next five years. Besides, upgrading local infrastructure, the globalisation of supply chains and rapid growth of? the middle classes are also seen as opportunities for businesses’ growth.

Xu Hua says: “Clearly APAC faces challenges, but in the meantime we find opportunities. Ageing populations could boost the growth potential of sectors such as healthcare. And the growing trend of automation could help offset the labour shortages some businesses are facing. Business leaders and policymakers need to work together to turn threats into opportunities to fully unlock the economic potential of a region which is home to three in five people on earth. Strategies such as ‘Belt and Road’ initiatives will enhance the competitiveness of the region and bring in more opportunities for development.”

For more reports please refer to International business report