Asia’s demographic squeeze may not be destiny, BofA economists say

Bank of America economists warn that Asia’s falling birth rates and rapidly aging populations pose a downside risk to regional growth, productivity and labor supply, potentially creating disinflationary pressure. However, the report argues the slowdown isn’t inevitable: faster AI adoption, greater investment in human capital and higher retirement ages could offset demographic headwinds. For markets, the outlook implies sustained structural pressure on GDP and earnings for Asia-exposed indices (e.g., Japan 225), while boosting demand for sectors serving older consumers — wellness, preventive healthcare, fitness, leisure and services — and technology and automation beneficiaries. Policy and corporate responses will be key drivers of relative sector and index performance going forward.