Japan's situation is the most extreme example. Its population has been steadily declining for the last decade, with 2016 marking the first time in 117 years that the total number of births fell below one million. Meanwhile, the number of people over 65 continued to grow.
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Korea is 20 years away from a 'demographic time bomb,' IMF says
Economists have coined an unsettling term to describe a phenomenon in countries with low fertility rates and poor economic growth: demographic time bomb.
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According to a new report from the International Monetary Fund, Korea could be next.
The current economic and social landscape in Korea looks a lot like Japan did in the early 1990s, the report explains. If left unchecked, the country could see its own demographic time bomb emerge sometime around 2035.
The IMF report, entitled "Korea's Challenges Ahead — Lessons from Japan's Experience," finds that Japan's working-age population shrank as people continued to age into retirement. In 1995, about 63% of people were considered to be of working age (between 18 and 65). By 2015 it had declined to 56%. Korea's current working-age population is 66.5%, but analysts expect that number to match Japan's 2015 rate within the next couple of decades.
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As Japan's workforce dwindled, the country saw its projected rate of economic growth fall from an average of 4% in the late 1980s to less than 1% in the 2000s. Korea, meanwhile, saw its own rate fall from 8% in 1991 to 2.9% in 2015.
Korea has yet to see the full effects of its demographic trend, but unless it takes some lessons from its eastern neighbor, history could very well repeat itself.
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