Taiwan’s Asset Deflation Linked to Demographics

Much has been written about the link between Japan’s aging society and the asset deflation that the country has experienced over the past 22 years. 

There is a disconcerting correlation between the progression of Japan’s aging society and the relentless bout of deflation that began after the Nikkei peaked in 1989.

A similar and equally distressing story exists in Taiwan. 

Taiwan is one of the most rapidly aging societies in the world, and similar to Japan, its population is shrinking.

According to a recent Bloomberg article, Taiwan’s current population of 23 million will shrink to less than 19 million by 2060.  The current .9 fertility rate in Taiwan is less than half of the 2.1 replacement rate.

Taiwan’s Taiex index has been one of the worst performing indexes in the world since 1989.  While nowhere close to the near 80 percent decline in Japan’s Nikkei, Taiwan’s market is down 25 percent since 1989.

Taiwan will be an interesting case study for those who immigration advocates as the island’s population density is an obstacle to large-scale immigration.

Source: Bloomberg

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