In a photograph taken on Might 26, 2016 a mobility scooter sits parked earlier than rice fields in Gunwi, some 200 kilometres south of Seoul.
By 2030, 1 / 4 of all South Koreans can be over 65 years outdated, and the general inhabitants is predicted to peak at round 52 million the identical yr earlier than getting into a interval of regular decline. This so-called “silver tsunami” poses a serious problem for Asia’s fourth-largest financial system because the younger, working-age inhabitants declines and the price of caring for the aged escalates. And in distant, rural communities like Gunwi, which lies some 200 kilometers southeast of Seoul, the development is exacerbated by a youth exodus to the cities for work.
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South Korea is staring down a demographic freight practice. The nation, often called one of many “4 Asian Tigers” for its meteoric financial rise from postwar poverty, is confronting a demographic cliff that might stall progress inside 20 years, research warn.
The Financial institution of Korea in 2024 projected that the nation’s rock-bottom beginning price can be one of many components that may push it into a chronic downturn by the 2040s.
A separate research by the Korea Improvement Institute in Might mentioned demographic shifts will hold dragging on potential progress, which may fall to close zero by the 2040s. In its projections, South Korea’s financial system may contract by 2047 in a impartial state of affairs — or as early as 2041 in a pessimistic one.
South Korea’s beginning price at the moment stands at 0.748 in 2024, a slight rise from the report low of 0.721 in 2023. That compares with an Group for Financial Cooperation and Improvement common of 1.43 in 2023. The generally cited “substitute price” for international locations to forestall a declining inhabitants is 2.1.
What a 0.72 fertility price means for South Korea is that for each 100 Koreans, they might have about 36 kids at present ranges, shrinking the workforce throughout generations. That might minimize into productiveness and sluggish progress, specialists say.
Miracle for ‘miracle on the Han River’?
If technological innovation fails to offset this decline, Korea will see a “sustained financial slowdown,” Lee In-sil, Director of the Korea Peninsula Inhabitants Institute for Future, informed CNBC.
And it isn’t for lack of making an attempt. The nation has rolled out package deal after package deal of assist measures for newlyweds to have kids, together with child bonuses and money rewards. Seoul expended over $270 billion over the previous 16 years on incentives to advertise childbirth, in line with a 2024 paper within the Journal of Medical Ethics.
In 2023, Seoul even mooted an concept to exempt males from its obligatory army service if that they had three or extra kids earlier than the age of 30.
However such efforts have made little impression in a rustic hailed because the “Miracle on the Han River” for its fast postwar rise. “I do not assume there’s any method that inhabitants coverage can successfully elevate fertility ranges in South Korea in any considerable method,” Nicholas Eberstadt, a political economist on the American Enterprise Institute, informed CNBC.
Folks cycle alongside a monitor backdropped with town skyline in Singapore on June 27, 2025.
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Whereas South Korea’s whole fertility price had marginally elevated in 2024, “we shouldn’t be popping the champagne corks,” Eberstadt mentioned, as it’s nonetheless far beneath the two.1 substitute price. He famous that the specified household measurement in South Korea remains to be beneath the two.1 substitute price, which implies that whereas the TFR would possibly climb greater, it won’t attain the two.1 determine.
Pension impression
A shrinking workforce can even squeeze the pension system. In March, South Korea handed its first pension fund reform in 18 years, extending the depletion of the state pension fund by 15 years to 2071.
Amongst South Korea’s 4 main pension techniques — army, non-public college staff, civil servants, and nationwide pensions — the army pension and civil servants’ pension have already been depleted, Lee mentioned.
Present reforms will see a construction the place youthful generations pay greater premiums whereas receiving decrease advantages, which can inevitably result in criticism for transferring the burden to future generations, she added.
A smaller draft pool additionally has protection implications. South Korea’s energetic troops have fallen 20% to about 450,000, down from 690,000 in 2019. South Korean armed forces are augmented by 28,500 U.S. troops, and Seoul has a mutual protection treaty with Washington.
South Korea remains to be formally at warfare with North Korea, because the Korean Conflict in 1953 ended with a ceasefire, not a peace treaty. North Korea boasts one of many largest standing army forces on this planet, with round 1.23 million personnel.
No motive to be pessimistic
Regardless of the awful outlook for Asia’s fourth-largest financial system, some analysts warning in opposition to despair.
Lee, who was additionally the previous director basic of the nationwide statistics company, mentioned economies can discover methods to adapt.
“When an financial system faces recession, it usually responds with varied efforts to reinforce productiveness by technological innovation, immigration insurance policies, and different measures to forestall additional decline,” she mentioned.
AEI’s Eberstadt additionally famous that South Korea can keep and even improve its prosperity regardless of growing older and shrinking. He pointed to the Seventies, when fears of useful resource shortage grew because the world’s inhabitants surged and doubts arose about find out how to feed it.
In 1968, the guide The Inhabitants Bomb, co-authored by former Stanford College professor Paul Ehrlich and researcher Anne Ehrlich, predicted international famine and a rising dying price because the inhabitants grew.
Nevertheless, 50 years later, the world is “richer, higher educated, higher fed, higher housed, extra affluent, a lot much less absolute poverty, than when the world was smaller,” Eberstadt mentioned.
KPPIF’s Lee mentioned that, contemplating the Korean authorities’s fast coverage adjustments and evolving public consciousness lately, she is assured that breakthrough options will emerge.
Only a few folks would have guess that South Korea may accomplish what it has as we speak when the Korean Conflict halted in 1953, Eberstadt mentioned.
“Human beings are a uniquely adaptable,” he added. “This can be a very totally different type of problem, however I do not assume that the report of the rapid previous means that it is good cash to guess in opposition to South Korean inhabitants.”
