Hong Kong's labor pool may start to shrink sooner than expected, according to a new report, which could set the stage for protracted low economic growth.
"Hong Kong's working age population is expected to post almost no growth over 2015 and 2016 before beginning to decline from 2017 onwards," Morgan Stanley economists said in a recent report. Working age is typically defined as individuals aged 15 to 64.
The forecast marks a significant change after the labor force averaged 0.9 percent annual growth over the past decade. It also means the city's demographic issue is more urgent than previously thought. Back in November, Secretary for Labor & Welfare Matthew Cheung said the city's labor force of 3.59 million would only start to decline after 2018.
"Worryingly, this projection of weak demographic trends is taking place even with a relatively optimistic assumption about net migration trends, suggesting that the underlying population dynamics will deteriorate at a far more rapid pace," the report said.
The problem is worsened by the fact that Hong Kong's fertility rates are consistently at the very bottom percentile in CIA World Factbook rankings.
Moreover, the bank expects the city's age dependency ratio - the proportion of older dependents to the working-age population - to climb to 42 percent by 2020 from 35 percent presently. Hong Kong's ratio is already the second-highest in Asia after Japan.