• The population of older persons is increasing both in numbers and as a share of the total

• Malaysia has experienced a rapid demographic change for the past 50 years

• Coping with ageing population and structural demographics in economy

• Higher old age dependency ratio

• What does this mean from an economic perspective?

• The economics of an ageing population

• Managing the country's ageing population

Virtually every country in the world is experiencing growth in the number and proportion of older persons in their population. Population ageing - the increasing share of older persons in the population - is poised to become one of the most significant social transformations, with implications for nearly all sectors of society, including labor and financial markets, the demand for goods and services, such as housing, transportation and social protection, as well as family structures and intergenerational ties. Preparing for the economic and social shifts associated with an ageing population is thus essential to ensure progress in development. An ageing society is defined as having a minimum 7.0% of its population aged 65 and older, while an aged nation has 14.0% or more in that age group.

According to the World Population Prospects database (UN, 2022), the global population is expected to reach 8.5bn in 2030, 9.7bn in 2050 and 10.4bn in 2100. In 2020, the global population growth rate fell under 1 per cent per year for the first time since 1950. The world’s population is projected to reach a peak of around 10.4bn people during the 2080s and to remain at that level until 2100. Population growth is caused in part by declining levels of mortality, as reflected in increased levels of life expectancy at birth. Globally, life expectancy reached 72.8 years in 2019, an increase of almost 9 years since 1990. Further reductions in mortality are projected to result in an average longevity of around 77.2 years globally in 2050. Following a drop in mortality, population growth continues so long as fertility remains at high levels. When fertility begins to fall, the annual rate of growth starts to drop. Two-thirds of the projected increase in global population through 2050 will be driven by the momentum of past growth that is embedded in the youthful age structure of the current population.

The population of older persons is increasing both in numbers and as a share of the total. The proportion of persons aged 65 or over is projected to increase globally. Worldwide, persons aged 65 years or over outnumbered children under age five for the first time in 2018. In 2022, there were 771mn people aged 65 years or over globally, 3 times more than the size in 1980 (258mn). The older population is projected to reach 994mn by 2030 and 1.6bn by 2050. As a result, by 2050 there will be more than twice as many persons aged 65 or older than children under 5 globally, whereas the number of persons aged 65 years or over globally will be almost the same as the number of children under age 12. While in some countries the rapid growth of the older population results mainly from sustained high levels of fertility in the past, the continued reduction of premature mortality of successive generations is the main driver in other countries. The proportion of persons aged 65 or over is projected to increase globally between 2022 and 2050. At the world level in 2022, approximately 10% of people are aged 65 or over. The proportion of older persons in the world is projected to reach nearly 12% in 2030 and 16% in 2050. Europe and Northern America had the largest proportion of older population in 2022, with almost 19% aged 65 or over, followed by Australia and New Zealand (16.6%). Both regions are continuing to age further. Projections indicate that by 2050 one in every four persons in Europe and Northern America could be aged 65 years or over. Populations in other regions are also projected to age significantly over the next several decades. For Latin America and the Caribbean, the share of the population aged 65 years or over could increase from 9% in 2022 to 19% in 2050. Similarly, the proportion aged 65 or over in Eastern and SouthEastern Asia is expected to double from around 13% in 2022 to 26% in 2050.

The COVID-19 pandemic has affected all three components of population change. Global life expectancy at birth fell to 71.0 years in 2021, down from 72.8 in 2019, due mostly to the impact of the coronavirus disease (COVID-19) pandemic. Available evidence about the effect of the COVID-19 pandemic on fertility levels remains mixed. In low- and middleincome countries, the availability of and the demand for contraception, as well as reported numbers of unintended pregnancies and births, have remained relatively stable. In highincome countries, where more detailed information is available from birth registration systems, it appears that successive waves of the pandemic may have generated short-term fluctuations in numbers of pregnancies and births. The pandemic severely restricted all forms of human mobility, including international migration.

Malaysia’s demographic crisis. In 2020, Malaysia’s total population aged 65 years and over is higher at 6.8% of 32.4 million total population, compared to 5% of 27.5 million in 2010. Based on the Housing and Population Census 2020, Malaysia was not categorised as an ageing nation then. However, according to the Current Population Estimates (2023) by Department of Statistic Malaysia (DOSM), the total population of Malaysia in 2023 was estimated at 33.4mn as compared to 32.7mn in 2022 with a growth of 2.1%. The composition of population aged 15-64 years (working age) increased to 70.0% in 2023 from 69.6% in 2022. The percentage of the population aged 65 years and over (old age) increased to 7.4% from 7.2% for the same period. Meanwhile, the composition of population aged 0-14 years (young age) in 2023 decreased from 23.2% in 2022 to 22.6%. The median age of Malaysia’s population reached 30.7 years in 2023 up from 30.4 years in the previous year. In DOSM’s Population Projections (Revised), Malaysia, 2010-2040, the population in Malaysia is projected to increase to 41.5m by 2040. Malaysia is officially considered as an ageing country in 2020 as the populace aged 65 years and above reached 7.3% of national population. By 2040, Malaysia is expected to become aged nation as population of those aged 65 and over estimated to reach 14.5%. It is also anticipated that by 2050, Malaysia’s population aged above 65 will be more than 15%, qualifying Malaysia as an aged nation.

Source: BIMB Securities Research - 4 Sept 2023