Asia’s Youth Job Crisis

Chetan Ahya, Morgan Stanley's Chief Asia Economist, discusses the significant challenge of a soft labor market facing Asia's young workforce, particularly in China, India, and Indonesia. He highlights that youth unemployment averages 16% across Asia, with rates in the three most populous economies being double that of other Asian countries. Ahya attributes China's rising youth unemployment to a mismatch between a surge in university graduates and a decline in economy-wide employment, while India faces high unemployment and underemployment, requiring significantly higher GDP growth to stabilize job markets. Indonesia's challenges include high youth unemployment and a large informal sector, primarily due to weak investment growth. The proposed solutions involve China shifting towards consumption and services, and India and Indonesia boosting investment, especially in industrial and export sectors, with social welfare spending as a potential fallback if reforms are insufficient.