"COVID-19 Accelerates South Korea's Low Birthrate... Fertility Rate May Drop to 0.7"

Bank of Korea 'BOK Issue Note - Assessing Demographic Change Conditions in the Post-Corona Era'

[Asia Economy Reporter Kim Eunbyeol] It is forecasted that the novel coronavirus disease (COVID-19) pandemic will further accelerate South Korea's low birthrate and aging population. The total fertility rate (TFR) this year is expected to fall below 0.85, but since the impact of the COVID-19 pandemic has not yet been fully reflected, the shock is anticipated to become more apparent starting next year.

On the 30th, the Bank of Korea stated in its 'BOK Issue Note - Reviewing Conditions of Population Structure Changes in the Post-COVID Era' that "The total fertility rate was initially projected to decline to 0.86 next year and then gradually rise to maintain around 1.27 from 2040 onwards, but due to the impact of COVID-19, the TFR could drop to as low as 0.72 in 2022." It added, "From a pessimistic perspective, it is not possible to rule out the possibility of an even lower rate."

South Korea had been experiencing low birthrates and aging population even before COVID-19. Currently, the proportion of elderly population in the country is 15.7%, which is lower than the OECD average of 17.9%, but the speed of aging is the fastest. The fertility rate stands at 0.84, one of the lowest in the world, and the marriage rate, which can be seen as a leading indicator of fertility, is also the lowest among OECD member countries. This suggests that fewer marriages lead to lower birthrates and a higher proportion of elderly people. South Korea's life expectancy has increased by an average of 0.42 years annually since the 1970s and currently stands at 82.7 years as of 2018, surpassing the OECD average of 80.6 years.

Kim Minsik, Deputy Director of the Macroeconomic and Fiscal Team at the Bank of Korea's Research Department, said, "South Korea's total fertility rate was the only one in the world to record a rate below 1.0 (0.98) in 2018, and it has fallen to 0.84 as of the third quarter. Considering the forecast for the fourth quarter, the annual rate for this year is likely to fall below 0.85." According to Statistics Korea, the average total fertility rate for the first to third quarters of this year is 0.86.

Kim added, "With the ultra-low birthrate trend continuing even before the COVID-19 crisis and the shock of COVID-19 adding to it, low birthrate and aging are expected to accelerate. Considering pregnancy postponement and decreased marriages due to COVID-19, the impact on fertility rates is expected to continue for at least two years from this year through 2022." He also said, "COVID-19 is expected to have a negative impact on population dynamics for a considerable period through changes in marriage and childbirth behaviors among young people. The baby boom phenomenon that typically occurs after large-scale disasters is also expected to be less significant."

The factors determining fertility and marriage rates can be broadly classified into two categories: economic factors (employment, income, housing, education, etc.) and socio-cultural factors (child-rearing environment, views on marriage and children, marriage and childbirth age, etc.). Kim believes that COVID-19 has affected both of these factors.

First, the employment and income shocks caused by COVID-19 have been relatively concentrated among people in their 20s and 30s, who are the main actors in marriage and childbirth. Additionally, companies are exhibiting risk-averse hiring practices due to concerns about the spread of infectious diseases, which may have an impact. Kim said, "The economy can recover if COVID-19 improves, but if labor structures or demand change due to expanded automation investments, it may become difficult for young people to secure stable income, leading to declines in marriage and fertility rates."

With the spread of non-face-to-face lifestyles and intensified competition in the labor market due to COVID-19, positive views on marriage are expected to shrink further. Currently, the maternal age at childbirth in South Korea is high, and postponing marriage or childbirth due to COVID-19 may lead to temporary delays turning into permanent abandonment.

Kim said, "The period when South Korea's elderly population proportion becomes the highest in the world may come earlier than initially expected," and advised, "To ensure sustainable growth, it is necessary to strengthen marriage and childbirth policy responses from economic, social, and cultural perspectives." He added, "As the end of COVID-19 approaches with vaccine development, temporary postponements of marriage and childbirth are expected to be resolved, and fertility rates are anticipated to partially recover with some time lag."

This content was produced with the assistance of AI translation services.