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Hong Kong Special Administrative Region; Macroeconomic Impact of an Aging Population in a Highly Open Economy

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  • Lamin Y Leigh

Abstract

Hong Kong SAR's population is aging rapidly. This paper concludes that, without a change in policies, aging could adversely affect growth and living standards. While higher labor productivity growth and increased migration of younger skilled workers from the Chinese mainland, would attenuate the economic impact of aging, they would not offset it fully. Aging will also put pressure on public finances, particularly as a result of rising health care costs. There is a relatively narrow window of opportunity to implement policies to lessen the impact of aging, given that the demographic effects could start setting in as early as 2015 when the working population's support ratio peaks. In recent years, the Hong Kong SAR authorities have been focusing on policies that could help limit the fiscal impact of aging, including continued expenditure restraint on non-age-sensitive areas, reform of health care financing (including introducing private health insurance system), and tax reforms.

Suggested Citation

  • Lamin Y Leigh, 2006. "Hong Kong Special Administrative Region; Macroeconomic Impact of an Aging Population in a Highly Open Economy," IMF Working Papers 06/87, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:06/87
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    References listed on IDEAS

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    1. Mehmet S Tosun, 2005. "Global Aging and Fiscal Policy with International Labor Mobility; A Political Economy Perspective," IMF Working Papers 05/140, International Monetary Fund.
    2. Faruqee, Hamid & Muhleisen, Martin, 2003. "Population aging in Japan: demographic shock and fiscal sustainability," Japan and the World Economy, Elsevier, vol. 15(2), pages 185-210, April.
    3. Hamid Faruqee & Douglas Laxton & Bart Turtelboom & Peter Isard & Eswar S Prasad, 1998. "Multimod Mark III; The Core Dynamic and Steady State Model," IMF Occasional Papers 164, International Monetary Fund.
    4. Thai-Thanh Dang & Pablo Antolín & Howard Oxley, 2001. "Fiscal Implications of Ageing: Projections of Age-Related Spending," OECD Economics Department Working Papers 305, OECD Publishing.
    5. Holzmann, Robert, 2005. "Demographic Alternatives for Aging Industrial Countries: Increased Total Fertility Rate, Labor Force Participation, or Immigration," IZA Discussion Papers 1885, Institute for the Study of Labor (IZA).
    6. Hamid Faruqee, 2002. "Population Aging and its Macroeconomic Implications; A Framework for Analysis," IMF Working Papers 02/16, International Monetary Fund.
    7. Leif Lybecker Eskesen, 2002. "Population Aging and Long-Term Fiscal Sustainability in Austria," IMF Working Papers 02/216, International Monetary Fund.
    8. Blanchard, Olivier J, 1985. "Debt, Deficits, and Finite Horizons," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 223-247, April.
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    Cited by:

    1. International Monetary Fund, 2007. "Guarding Against Fiscal Risks in Hong Kong SAR," IMF Working Papers 07/150, International Monetary Fund.

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