IMF report highlights economic challenges of aging populations

In its latest report on the world economic outlook, the International Monetary Fund reports that advanced economies face a new reality of lower potential growth, in part because of aging populations. Taiwan, with a rapidly aging population of its own, could see growth lag, but getting more people to work may offset the trend. Sixty-five-year-old Taiwan Railways station worker Mr. Wei has been at his post for 43 years, but he still cannot retire.Wei Ah-hsienTaiwan Railways Station WorkerWe used to start working when we were 17 or 18. Now people don’t start until they’re around 30. Today, about 30 percent of people 60 and older in Taiwan like Wei are still working, but that number could explode in the future.Hsin Ping-lungNational Taiwan University ProfessorI think that in 10 to 15 years, the labor participation rate of people 60 and over will increase by 20 percentage points. That can be foreseen. More seniors participating in the labor force may not be a bad thing. In its latest World Economic Outlook, the IMF says aging populations have dragged down economic growth because fewer people work and spending declines. The IMF report says having more seniors work could offset that, but demand is also an important factor.Hsin Ping-lungNational Taiwan University ProfessorI’m concerned that if demand is not stimulated, then an increase in the labor supply will bring unemployment.Professor Hsin worries that more seniors working could crowd out opportunities for younger workers. What the IMF report signals is that aging economies are all facing real challenges to maintaining their growth potential in the future.