Asia’s aging population doesn’t have to be a fiscal burden. With smart planning, it can be a growth opportunity

Runchana Pongsaparn is group head and lead economist at ASEAN 3 Macroeconomic Research Office (AMRO). Koon Hui Tee is a senior economist at AMRO.

Population aging is one of Asia’s defining social challenges. As people live longer and fertility rates remain low, several Asian economies now face the prospect of a shrinking labor force alongside a rising share of older people.

This problem is primarily viewed through a fiscal lens: Rising healthcare costs and a shrinking workforce put mounting pressure on public finances.

But that framing misses a more important question: what if longer lives could strengthen, rather than strain, economic growth?

It’s true that population aging increases healthcare spending. Older people need more frequent medical care, including for chronic conditions. Newer, more effective treatments are more expensive. More sedentary lifestyles, greater health awareness, and wider access to care have also increased the use of healthcare systems.

But aging doesn’t need to be an economic and fiscal drag. In fact, with the right policies, it can unlock an economic dividend.

As populations age, healthcare policy will become increasingly intertwined with macroeconomic policies, particularly around the labor market and economic growth. A well-designed healthcare system will keep people healthy and economically active for longer—and thus ensure that economies stay healthy too.

Lessons from Singapore and Japan

Singapore and Japan are demonstrations of how rising healthcare costs are not the same thing as unsustainable healthcare costs.

Singapore’s healthcare system combines public subsidies with compulsory medical savings and co-payments, encouraging people to take greater responsibility for their own healthcare spending, while still keeping things affordable.

Its financing framework is anchored by the 3Ms—MediSave, MediShield Life, and........

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