Society

Vietnam’s economy to slow as population ages: WB report

Population aging could slow down Vietnam's long-term growth in the 2020–2050 period by 0.9 percentage points compared with the last 15 years, a new World Bank (WB) report finds.
Vietnam’s economy to slow as population ages: WB report ảnh 1Caring for the elderly's health (Photo: VNA)
Hanoi (VNA) – Population aging could slow down Vietnam's long-termgrowth in the 2020–2050 period by 0.9 percentage points compared with the last15 years, a new World Bank (WB) report finds.

According to the report Vietnam: Adapting to an Aging Society, jointlyproduced by the WB and the Japan International Cooperation Agency (JICA), Vietnamis going through the demographic transition to an older society at an earlierstage of economic development and a lower level of per capita income than othercountries who have experienced a similar shift.

The prospect of “getting old before getting rich” means thatVietnam faces a set of important challenges whose solutions require making hardpolicy choices.

With falling birth rates and a rising life expectancy,Vietnam’s elderly are expected to account for between 10 percent to just under20 percent of its population by 2035. Vietnam’s old age dependency ratio, thenumber of people over 65 divided by the number of those of working age, isestimated to double from 0.11 in 2019 to 0.22 in 2039.

The report finds that long-term growth over the period2020–2050 will slow by 0.9 percentage points compared with the last 15 years asits population ages. At the same time, addressing the needs of an aging societyis forecast to cost between 1.4 percent to 4.6 percent of GDP in additionalexpenditure. Expanding coverage and improving service quality will drive growthin fiscal costs.

The report offers recommendations on how Vietnam can managethe aging of its population effectively, based on lessons learned in other countriesthat have experienced a similar demographic transition, particularly Japan. It suggests reforms to help improve labour force participation andproductivity, increase the efficiency of public expenditures, and strengthenservice delivery system. The report also recommends policy actions in fourareas most affected by the aging trends: labour market, pension, health, andaging care.

“As Vietnam’s population ages, it will be important to buildthe skills of the workforce to boost innovation and productivity in theeconomy, while ensuring that pension reforms begin now to sustain livelihoodsfor the elderly in the decades to come,” said Carolyn Turk, World Bank CountryDirector for Vietnam./.
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