Singapore's aging population is biggest hurdle to its strong rebound

Same goes for five other Asian countries.

"The demographic trends in China, Korea, Taiwan, Singapore, Hong Kong and to some extent Thailand, are reaching an inflection point where the additions to the working-age population (ages 15-64) are slowing sharply or even declining. These weakening demographic trends will pose a challenge for economic growth as they determine the productive labour input towards the production process," said Morgan Stanley Research in its newest Asia Insight report.

"Fewer additions to the workforce will mean that an important input to the production process will be curtailed, hence acting as a natural constraint towards higher GDP growth rates. Indeed, this was observed in Japan in the 1970s, when GDP growth decelerated sharply once the age dependency ratio (non-working age population to working age population) stopped improving. A similar deceleration in GDP growth was observed in Korea in the 1990s once the demographic trend stopped improving," said Morgan Stanley. 

"Moreover, weakening demographics will mean that the policy imperative of maintaining stable labour markets will shift from generating employment opportunities to absorb new additions to the workforce to generating higher value added jobs and encouraging greater and longer participation in the workforce. This implies that the tactical response of policy makers to any slowdown in economic activity will also likely shift," it added.

Policy reforms aaddressing the weakening demographics in Singapore and these select Asian countries are needed to ensure strong sustained growth, Morgan Stanley said.

"For instance in the case of China, despite the slowdown in economic activity, the overall labour demand-supply has remained above 100% (105% in the quarter ended September 2012), indicating that the labour market remains tight, hence negating the need for further investment stimulus to create jobs for new additions to the workforce (albeit there is a need for job creation for rising number of junior college and undergraduate level educated work force).