A new report by the central bank shows that every one-percentage-point increase in the senior population will lead to a five-point-nine-percent drop in the impact on economic growth from government spending.

According to an analysis released by the Bank of Korea(BOK) on Monday, the cumulative fiscal multiplier two years after the ratio of seniors increased by one percentage point fell from zero-point-78 to zero-point-73.

The fiscal multiplier shows how much the gross domestic product(GDP) expands when fiscal expenditure is increased by one unit of measurement.

In the report, officials said the aging population weakens the growth effect of fiscal policies through a reduction in labor supply, quality of employment and slowed consumption.

The nation's productive age population of 15-to-64 year olds has been declining since 2018, while the percentage of seniors with a low economic participation rate has climbed.

The report also forecast consumption to fall among those in their 50s or older due to concerns about savings in the wake of rising life expectancies.