At the annual meeting of the American Economic Association in early January, former U.S. Federal Reserve Chairwoman Janet Yellen, former European Central Bank President Mario Draghi and eminent economists warned that Western economies risked "Japanification": a future of sluggish growth, low inflation and perpetually low interest rates. Yet, surprising as it may seem, this malaise also threatens East Asia.

Hong Kong, Singapore, South Korea and Taiwan, once called the "Asian tigers," now face slow growth and disinflationary pressures. Last year, Hong Kong's economy contracted by 1.2 percent, while the other three grew only modestly — Singapore by 0.6 percent, and South Korea and Taiwan by about 2 percent each. Inflation in each of these three countries was about 0.6 percent. East Asia's economies suffered from weaker external demand — a result of slow growth in major industrialized countries and China — as well as domestic structural and supply factors. Moreover, their growth potential is trending downward.

Economically and demographically, these East Asian countries seem to be tracking Japan. For starters, Japan is the world's most rapidly aging society, with 28 percent of its population aged 65 and above, up from 14 percent in 1994. This age cohort's share of the population in Hong Kong, Singapore, South Korea and Taiwan now averages about 14 percent and is forecast to increase rapidly in the coming decades. A shrinking workforce will in turn reverse the demographic dividends that previously supported strong regional growth. In South Korea, for example, average annual GDP growth between 2020 and 2040 is forecast to be about 1 percentage point lower than now.