Aging Asia to strain world's long-term economic growth

The Asia-Pacific region will continue to power global economic growth in 2013, but the region's increasing aging population will cast a shadow on the long-term development, according to a Canadian think-tank.

"Productivity gains and a large, young working-age population have done much to boost Asian economic growth over the past three decades. But Asia's demographic dividend is quickly coming to an end," said Kip Beckman, author of the Conference Board of Canada's recent published report World Outlook: Spring 2013.

Due to fewer births and longer life expectancies, the average age of the population in Asia is increasing rapidly. Today, 7 percent of Asia's population is above 65 years old, while the share has increased to 23 percent in Japan, according to the Conference Board of Canada.

The demographic shift has been especially prevalent in Chinese Mainland. By 2035, the median age will increase to 45 from 35 -- equal to Japan's current level, whose experience has shown that it will lead to reduction in savings rate and made it more difficult to finance investment domestically, it said.

According to the organization's analysis, the changing demographic profile in the region comes from two major shifts. First, women in Asia have become better educated, making them more financially independent and less likely to rush into marriage at a young age.

Second, the cost of raising children has risen substantially. For instance, in South Korea, education costs are a major contributor to the country's huge household debt -- currently 160 percent of income.

To maintain future economic growth, the think-tank suggested the region increase investment in education to enhance productivity and consider more open immigration policies than currently existing ones.