AI and robotics could offset impact of aging populations in Asia

Declining fertility rates have long been considered a major risk to economic growth, but analysts suggest the outlook may not be entirely negative for several advanced Asian economies. Rising investment in AI and robotics is increasingly viewed as a way to offset labour shortages caused by ageing populations.

According to analysts at Bank of America Global Research, technological innovation driven by AI and robotics could support productivity growth even as workforces shrink. Strong ecosystems in semiconductors, technology hardware, and industrial machinery allow some countries in the region to deploy advanced technologies faster and at lower cost than many other parts of the world.

South Korea currently has the highest robot density in the world, with about 1,012 industrial robots per 10,000 manufacturing workers. China has 470 and Japan 419, both significantly above the global average of 162, according to 2024 figures from the International Federation of Robotics.

Analysts say governments across East Asia are accelerating the adoption of AI and robotics to address demographic pressures. In particular, China, South Korea, and Japan have expanded investments in robotics, AI systems, and advanced manufacturing technologies to maintain economic productivity.

Population projections highlight the scale of the challenge facing these economies. By 2050, about 37 percent of Japan’s population and nearly 40 percent of South Korea’s population are expected to be aged 65 or older, while China’s share could reach around 31 percent.

Despite concerns about slowing growth, economists argue that advances in AI and robotics could weaken the traditional link between economic output and workforce size. Automation technologies not only replace routine tasks but also enhance human productivity in many industries.

A study by the Bank of Korea estimated that demographic pressures could reduce the country’s gross domestic product by 16.5 percent between 2023 and 2050. However, wider adoption of AI and robotics could limit the decline to around 5.9 percent under favourable conditions.

Some analysts caution that the economic benefits of automation may not be evenly distributed. While AI and robotics can improve productivity, technological gains often benefit capital owners and highly skilled workers more than others.

Economists also warn that consumption may slow as the number of households declines, while governments may face greater fiscal pressure from higher pension and healthcare costs. Policymakers may need to invest in workforce retraining and education to help workers adapt to the growing role of AI and robotics in the economy.

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