Edited by Donghyun Park, Sang-Hyop Lee and Andrew Mason
Chapter 1: Overview: why does population aging matter so much for Asia? Population aging, economic growth, and economic security in Asia
The speed and strength of developing Asia’s recovery from the global financial and economic crisis has been surprising. Although exports and economic growth plummeted during the fourth quarter of 2008 and the first quarter of 2009, the sizable fiscal and monetary stimulus programs quickly enacted by governments around the region initially supported aggregate demand and growth in the face of collapsing world trade. The region’s resilient V-shaped recovery has gained depth and breadth as exports have recovered and private domestic demand has strengthened. What is all the more surprising is that the turnaround has taken place despite the continued fragility and uncertainty of the advanced economies. While it is far too early to tell whether Asia has decoupled from the business cycles of the advanced economies, the region’s robust performance is making a substantial contribution to the global outlook. The region now faces the difficult, fundamental challenge of sustaining growth beyond the crisis into the medium and long term. For decades prior to the crisis, Asia was the world’s fastest growing economic region; this strong, sustained performance transformed it from a group of typical developing countries into the third center of gravity of the world economy along with the European Union (EU) and the United States (US). The question remains, will Asia be able to return to its high-growth trajectory once the global crisis abates? Asia’s continued post-crisis success is far from automatic. The external environment is likely to be less benign because to a large extent, the weakness of the advanced economies reflects structural problems – failures in the US housing and financial markets and fiscal concerns in some EU countries – that will take time to sort out. The medium-term weakening of the advanced economies has negative repercussions for Asia’s mediumterm growth since those economies have traditionally been and remain key markets for its exports.
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