December 05 2019 / by World Data Lab / MarketPro
Silver Economy Spending Power Trends in Asia
Europe is not the only part of the world affected by demographic change–Asia is also aging. We estimate that Asia's 60+ cohort is currently around 3.5 times the size of Europe's in terms of headcount (642 million). According to the World Economic Forum, 16% of Asia’s population will be over the age of 65 by 2040 which is affecting the working age population. For example, in South Korea, the working-age cohort (18-65 years) is expected to shrink by 10% by the end of the next decade. As a result of this trend, the OECD estimates that nearly half of the people in South Korea aged 65-69 are currently employed. Of the population aged 70-74, it’s a third. These numbers are likely only going to increase in the coming years given the continuing increase in longevity meaning the Silver Economy is only going to grow.
Asia is an even bigger Silver Economy market than Europe
By 2030, the total annual spending power (in 2011 PPP $) by people aged 60 and over in Asia is expected to increase 103% to around $8.6 trillion while the number of people in this age bracket is expected to increase 40% to over 900 million. China currently has the largest share of 60+ Asian spending power representing 31% of the total. This will continue to be the case in 2030 as the spending power of Chinese seniors is expected to grow 147% from $1.3 trillion to $3.2 trillion. The Indian Silver Economy is also expected to experience explosive growth. By 2030, the Indian 60+ cohort is expected to have almost $1.4 trillion in spending power, representing an increase of 142% from today.
Per capita, the seniors of Hong Kong currently have the highest spending power ($37,937), almost the same as the seniors of Luxembourg in Europe ($38,907). This is projected to increase 28% to $48,508 over the next decade resulting in Hong Kong having the highest per capita spending power in the world in this cohort.
Broken down by gender, there are currently almost 42 million more women than men in this age group. This difference will increase to 65 million representing 15% more women than men overall.
High Silver Economy per capita Growth Expected in South and Southeast Asia
While China is and will continue to be one of the biggest Silver Economy markets in all of Asia along with India and Japan (these countries combined currently represent over two-thirds of the entire Asian Silver Economy), some of the largest growth over the next decade will come from South and Southeast Asia with the exception of Pakistan, Singapore, and Brunei. The following countries are expected to experience per capita spending power growth of above 80%: Bangladesh, India, Laos, Myanmar, and Vietnam. At the country level, Japan is expected to experience the smallest growth at 16% (from $944 billion to $1.1 trillion) which is expected since this cohort is expected to experience by far the smallest growth in headcount in all of Asia (7%) over the next decade.
Low to negative per capita spending power growth in the Middle East
While the 60+ cohort headcount is expected to explode in the Middle East, per capita spending power will not. Growth for countries in this region (with the exception of Lebanon and Yemen) is expected to be low and in some cases, slightly negative even though headcount growth ranges from a low of 29% in Israel to a high of 279% in the United Arab Emirates.
How important is the Silver Economy in Asia?
It’s clear that the Silver Economy cohort in Asia is huge but it has a smaller share of the region’s total spending power (15%) compared to Europe’s 28%. By 2030, this will increase slightly to 18%. While much of this is the result of demographic change, our projections indicate that except for the Middle East, growth in spending power is outpacing the headcount growth of this cohort. Companies and organizations with global operations should not only look at the Silver Economy in Europe but Asia as well.
November 19 2019 / by Baldwin Tong / MarketPro