Why human capital is unlikely to fully offset Hong Kong's ageing population

Human capital accumulation has a gradual nature.

In line with an evaluation of Hong Kong's medium-term growth, it has been noted that the impact of ageing population is unlikely to be fully offset by the accumulation of human capital.

According to a research note from Hang Seng Bank, the total growth contribution from labour (raw labour and human capital growth) has averaged 2.2 percentage points since 2010.

Hang Seng Bank noted that it has questions about the sustainability of this trend in the coming five years.

Here's more from Hang Seng Bank:

Labour contribution will be increasingly constrained by demographics and the limited upside room for an increase in the labour force participation rate.

Based on government estimates, growth in the working age population will take a sharp turn downward over the course of the 2010-2020 decade.

Because of the gradual nature of human capital accumulation, improvement in the ability of the workforce is not likely to fill the void that is being created by a shrinking working-age population.

We estimate that the labour contribution is not likely to match its past trends.