GLOBAL - Japan's economy will be the hardest hit by population ageing among advanced countries, according to the International Monetary Fund's (IMF) latest World Economic Outlook report.
The US-based IMF also said advanced countries would be more severely affected than developing countries by the demographic changes.
The report said population ageing, and thus higher spending on pensions and health-care, would slow economic growth in Japan and European countries, resulting in a future deficit.
“The elderly dependency ratio – which shows the population aged 65 and older as a share of the working-age (aged 15-64) population – is projected to rise dramatically in Japan and Europe, with lesser increases anticipated in the United States,” the report stated.
The IMF report predicted the share of the working-age population would fall in advanced countries but rise in many developing nations.
“In Japan and some European countries, this decline has already started and is projected to accelerate,” the report noted.
“In the United States, a high rate of immigration and higher fertility rates result in a more modest projected decline.”
The report called on Japan and Europe to permit more immigration to boost its working-age population but stressed this was only a short-term solution. Raising the retirement age and increasing birth rates could also help offset the impact, it said.
The IMF said ageing countries should not delay in planning for the future.
“Reforms to pensions and health care systems will become increasingly difficult to implement as populations age,” it said.
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