As Indonesia's Population Ages, What Happens to the Economy?
JAKARTA, KOMPAS.com — Indonesia has officially entered the aging population phase. The results of the 2025 Inter-Census Population Survey (SUPAS) released by Statistics Indonesia (BPS) show that the elderly population (aged 60 and above) accounts for 11.97% of the total population.
BPS Chief Amalia Adininggar Widyasanti stated that a country is classified as entering the aging population phase when the proportion of people aged 60 and above reaches at least 10%.
This phenomenon marks a shift in Indonesia’s demographic structure. The young population is decreasing while the elderly population continues to rise. At the same time, the birth rate is declining towards replacement level.
SUPAS 2025 recorded Indonesia’s total fertility rate (TFR) at 2.13, nearing the population replacement level of 2.1 children per woman.
Although Indonesia still enjoys a demographic dividend, the aging trend is becoming pronounced, especially in Java and Bali. Sixteen provinces have entered the aging population phase, with Yogyakarta Special Region having the highest elderly percentage at 17.83%.
This change in population composition is not merely a demographic issue. The International Monetary Fund (IMF) in its April 2025 World Economic Outlook report titled The Rise of the Silver Economy: Global Implications of Population Aging states that population aging is one of the largest demographic changes facing the world.
The IMF notes that declining birth rates and increasing life expectancy will significantly alter global population structures.
“Population aging is often associated with bleak prospects for economic and public finance growth,” the IMF wrote in the report.
The IMF projects global output growth will slow significantly throughout the 21st century due to demographic shifts. Average global economic growth between 2025-2050 is estimated to fall by 1.1 percentage points compared to the 2016-2018 average.
The IMF report also states that demographic trends are expected to account for nearly three-quarters of the global economic slowdown.
Research published by the Stanford Institute for Economic Policy Research (SIEPR), titled The Effect of Population Aging on Economic Growth, found that an increase in the elderly population impacts a decline in per capita GDP.
The study states that a 10% rise in the population aged 60 and above can reduce per capita GDP by 5.7%.
Researchers Nicholas Maestas and his team noted that the slowdown is primarily driven by a decline in labour supply.