Declining fertility rates have long been viewed as a drag on economic growth, but the outlook may not be entirely bleak for Asian economies such as China, South Korea and Japan, analysts said.

Demographic pressure was accelerating investment in robotics and artificial intelligence (AI) in these rapidly ageing yet technologically advanced countries, helping offset labour shortages and sustain productivity even as populations shrank, they argued.

Analysts at Bank of America (BofA) Global Research said China, South Korea and Japan could witness tech-driven growth despite their ageing populations. The commitment of these countries to AI and automation was likely to intensify as they faced shrinking labour pools and rising wage pressures, they argued in a February 24 report on low fertility rates in Asia.

“The region’s deep semiconductor, tech hardware and machinery ecosystems make deployment faster and cheaper than other regions”, the report’s authors said, noting that China and South Korea were already at the forefront of developing and adopting cutting-edge technologies.

South Korea boasts the world’s highest robot density, with about 1,012 industrial robots per 10,000 manufacturing workers. China has 470 and Japan 419, far above the global average of 162, according to 2024 data from the International Federation of Robotics.

Louis Kuijs, Asia-Pacific chief economist at S&P Global Ratings, said the governments of China, South Korea and Singapore had been most proactive in adopting and applying AI and robotics across the economy.

Japan was likely to see an accelerated roll-out, given the pronounced decline in its working population and growing reluctance to embrace foreign workers, he added.

Once the main drivers of global population growth, Asia has seen its fertility rates fall below replacement levels sooner than many expected. By 2050, about 37 per cent of Japan’s population and nearly 40 per cent of South Korea’s were expected to be aged 65 or older, according to BofA Global Research, with China’s share potentially reaching about 31 per cent.