Chart of the Day: Deteriorating demographics feared to cut down Singapore's growth prospects

Rapid aging could also undermine the country's fiscal position.

Singapore's economic growth could take a hit on back of rapidly aging population and declining resident population growth rate.

This chart from Deutsche Bank shows that the number of residents above 65 years old has accelerated to 7% per year since 2012 from less than 4% in the previous decade.

Meanwhile, resident population growth has gradually fallen from 1.8% in the 1990s to below 1% per annum since 2011.

"Our estimates show that unfavorable demographics, marked by a rising dependency ratio, could cut Singapore’s potential growth by nearly 1%-pt, holding other factors constant," the report said.

The report added that inadequate supply of labor will remain a drag to Singapore’s capacity to produce, especially if not countered by sufficient productivity gains.

“Moreover, Singapore’s rapidly aging population could undermine the city-state’s fiscal position and in turn, constrain the government’s ability to safeguard the economy from adverse shocks,” Deutsche Bank warned.