Asia is expected to see one clear demographic trend emerge in the next decade: a widening divide between the southeast, where the working-age population is growing at a strong pace, and the northeast, where the labor force is forecast to shrink.
"The next decade will be very different from previous decades when most of Asia was still experiencing demographic dividends, including China and Korea," Bank of America Merrill Lynch (BofAML) Economist Hak Bin Chua said in a report.
"Japan was largely the only country that was aging and shrinking in terms of its labor force and population in the previous decade. But in the coming decade, several Asian countries – including China, South Korea, Hong Kong and Thailand – will see their labor forces shrink. This will have important implications for GDP [gross domestic product] growth, consumer spending and asset prices, judging from Japan's experience," he said.
Japan is home to the fastest aging population in the world, with almost a quarter of its population over the age of 65. The country has struggled with sluggish growth stemming from a shrinking workforce, which has put pressure on the government to boost productivity levels.