Miracle under threat: South Korea’s birth rate collapse could undo decades of growth

South Korea is staring down a demographic freight train. The country, known arsenic 1 of the "Four Asian Tigers" for its meteoric economical emergence from postwar poverty, is confronting a demographic cliff that could stall maturation wrong 2 decades, studies warn.

The Bank of Korea successful 2024 projected that the nation's rock-bottom commencement complaint volition beryllium 1 of the factors that volition propulsion it into a prolonged downturn by the 2040s.

A separate study by the Korea Development Institute successful May said demographic shifts volition support dragging connected imaginable growth, which could autumn to adjacent zero by the 2040s. In its projections, South Korea's system could declaration by 2047 successful a neutral script — oregon arsenic aboriginal arsenic 2041 successful a pessimistic one.

South Korea's birth complaint presently stands astatine 0.748 successful 2024, a flimsy emergence from the grounds debased of 0.721 successful 2023. That compares with an Organization for Economic Cooperation and Development mean of 1.43 successful 2023. The commonly cited "replacement rate" for countries to forestall a declining colonisation is 2.1.

What a 0.72 fertility complaint means for South Korea is that for each 100 Koreans, they would person astir 36 children astatine existent levels, shrinking the workforce crossed generations. That would chopped into productivity and dilatory growth, experts say.

If technological innovation fails to offset this decline, Korea volition spot a "sustained economical slowdown," Lee In-sil, Director of the Korea Peninsula Population Institute for Future, told CNBC.

And it's not for deficiency of trying. The state has rolled retired bundle aft bundle of enactment measures for newlyweds to person children, including babe bonuses and currency rewards. Seoul expended implicit $270 cardinal implicit the past 16 years connected incentives to beforehand childbirth, according to a 2024 insubstantial successful the Journal of Medical Ethics.

In 2023, Seoul adjacent mooted an thought to exempt men from its mandatory subject service if they had 3 oregon much children earlier the property of 30.

But specified efforts person made small interaction successful a state hailed arsenic the "Miracle connected the Han River" for its accelerated postwar rise. "I don't deliberation there's immoderate mode that colonisation argumentation tin efficaciously rise fertility levels successful South Korea successful immoderate appreciable way," Nicholas Eberstadt, a governmental economist astatine the American Enterprise Institute, told CNBC.

While South Korea's full fertility complaint had marginally accrued successful 2024, "we should not beryllium popping the champagne corks," Eberstadt said, arsenic it is inactive acold beneath the 2.1 replacement rate. He noted that the desired household size successful South Korea is inactive beneath the 2.1 replacement rate, which means that portion the TFR mightiness ascent higher, it volition not scope the 2.1 figure.

A shrinking workforce volition besides compression the pension system. In March, South Korea passed its archetypal pension money reform successful 18 years, extending the depletion of the authorities pension money by 15 years to 2071.

Among South Korea's 4 large pension systems — military, backstage schoolhouse employees, civilian servants, and nationalist pensions — the subject pension and civilian servants' pension person already been depleted, Lee said.

Current reforms volition spot a operation wherever younger generations wage higher premiums portion receiving little benefits, which volition inevitably pb to disapproval for transferring the load to aboriginal generations, she added.

A smaller draught excavation besides has defence implications. South Korea's progressive troops have fallen 20% to astir 450,000, down from 690,000 successful 2019. South Korean equipped forces are augmented by 28,500 U.S. troops, and Seoul has a communal defence pact with Washington.

South Korea is inactive formally astatine warfare with North Korea, arsenic the Korean War successful 1953 ended with a ceasefire, not a bid treaty. North Korea boasts 1 of the largest lasting subject forces successful the world, with astir 1.23 million personnel.

Despite the bleak outlook for Asia's fourth-largest economy, immoderate analysts caution against despair.

Lee, who was besides the erstwhile manager wide of the nationalist statistic agency, said economies tin find ways to adapt.

"When an system faces recession, it typically responds with assorted efforts to heighten productivity done technological innovation, migration policies, and different measures to forestall further decline," she said.

AEI's Eberstadt besides noted that South Korea tin support and adjacent summation its prosperity contempt aging and shrinking. He pointed to the 1970s, erstwhile fears of assets scarcity grew arsenic the world's colonisation surged and doubts arose astir however to provender it.

In 1968, the publication The Population Bomb, co-authored by former Stanford University professor Paul Ehrlich and researcher Anne Ehrlich, predicted planetary famine and a rising decease complaint arsenic the colonisation grew.

However, 50 years later, the satellite is "richer, amended educated, amended fed, amended housed, much prosperous, overmuch little implicit poverty, than erstwhile the satellite was smaller," Eberstadt said.

KPPIF's Lee said that, considering the Korean government's accelerated argumentation changes and evolving nationalist consciousness successful caller years, she is assured that breakthrough solutions volition emerge.

Very fewer radical would person stake that South Korea could execute what it has contiguous erstwhile the Korean War halted successful 1953, Eberstadt said.

"Human beings are a uniquely adaptable," helium added. "This is simply a precise antithetic benignant of challenge, but I don't deliberation that the grounds of the contiguous past suggests that it's astute wealth to stake against South Korean population."