India is expected to move from an “aged” to a “super-aged” society in just 16 years, while it will take the US and Indonesia 19 years and 29 years, respectively, Moody’s Ratings said on Tuesday. Societies with a 7 per cent share of the population over 65 years are termed “ageing”, while countries with 14 per cent and 21 per cent of the population above 65 years are called “aged” and “super-aged”.
While India entered the “ageing” category around 2024, it is projected to reach the “aged” category around 2049 and the “super-aged” category roughly around 2065, compressing what was once a multigenerational adjustment into a few decades. The US will become a super-aged society around 2033-34, while Indonesia will take much longer than India, around 2077-78, to reach that category. Moody’s said emerging markets ageing at unprecedented speed means these countries will face the costs of ageing, such as rising pension, healthcare and long-term care costs, at much lower income levels than the advanced economies that aged before them.
The global demographics report by the rating agency said India’s fertility has already fallen below the replacement rate of 2.1. “While the population remains relatively young, its age structure is beginning to shift, setting the stage for a much older population later this century,” it said.
Japan has the most top-heavy population structure, with nearly 30 per cent of its population over 65 and about 11 per cent under 15. Korea is close behind, while China is moving rapidly in the same direction as large cohorts born before the one-child policy enter retirement.
Several factors help explain the decline. Rising educational attainment and labour force participation have led many people to delay starting families. Higher housing, childcare, education and healthcare costs have made raising children more expensive. “Some researchers argue that social media and greater global connectivity are spreading low-fertility norms more quickly across countries, while others point to economic uncertainty, geopolitical instability and concerns about the future as influencing family size decisions,” Moody’s said.
Moody’s said that at 32 per cent, India’s female labour force participation is the lowest among the 19 economies compared, with wide scope to boost labour supply.
The rating agency said while population growth has long been a tailwind for economic growth and creditworthiness, falling fertility is now changing that picture. “Fewer workers will limit productive capacity, while fewer households and consumers will weaken demand. As a result, countries will have to rely more on productivity to sustain growth,” it added.
Moody’s said that while policy and technology can ease the adjustment of ageing societies, they cannot reverse demographic trends. “As societies age, labor-force growth slows and pressure on public finances and healthcare systems rises. Economic and credit outcomes will increasingly depend on countries’ ability to expand labor supply, raise productivity, and reform institutions,” it said.
For businesses, the consequences extend beyond labour availability. Consumption patterns will increasingly reflect the preferences and spending power of older households. Financial markets will also be reshaped as older generations transfer trillions of dollars in assets to heirs, charities and other beneficiaries, Moody’s said.
The rating agency said adapting pension systems, healthcare provision and fiscal frameworks will become essential as societies age and dependency ratios rise. “Countries that move early may be better positioned to absorb demographic pressures,” it added.
