TOKYO (dpa-AFX) - Bank of Japan Governor Haruhiko Kuroda said on Thursday that Asian countries must pay more attention to the challenges posed by demographic change and take prompt action to sustain the economic growth momentum in the region.
'Japan's experience thus suggests that it is crucial not only to debate the challenges posed by the demographic onus, but also to take the necessary action at an early stage,' Kuroda said in a speech in Bangkok, Thailand.
'Prompt action is needed to preserve the growth momentum of the domestic demand-led economy in Asia.'
Kuroda pointed out that Japan is dealing with some significant demographic challenges of an ageing population and shrinking population. He also said China and Korea will follow in phasing out of demographic dividend into demographic onus.
'The transition from demographic dividend to demographic onus brings with it a series of problems,' Kuroda said.
'Perhaps the most pressing of these problems are a decline in the potential growth rate, a deterioration in the fiscal balance, and inter generational income transfers. These problems put downward pressure on the growth of domestic demand.'
The Japanese central bank chief also warned about the risks associated with high economic growth such as an unsustainable increase in domestic credit fed by short-term foreign borrowings.
'This is due to the lack of deep domestic financial markets. The current global accommodative financial conditions raise the possibility of unhealthy global capital flows into Asian economies,' Kuroda said.
'Such capital flows could result in the build-up of distortions and risks in the financial systems of these economies.'
Copyright RTT News/dpa-AFX