Asia's fourth-largest economy would see slower growth due to the declining pace of increases in capital and labor input, whereas government spending would surge to cover financial debts at public companies and public pension schemes, it said.

"The country needs to begin drawing up counter-measures from now to get better prepared for the aged society (aging population) society and prevent macroeconomic instability in advance arising from the weakening fiscal position," the Bank of Korea report said.

If the government did not need to provide support for the public corporations, the report said its baseline projection was for the central government's debt to grow only modestly to 37.3 percent of GDP by 2030.

(Reporting by Choonsik Yoo. Editing by Jane Merriman)

• A Permanent Economic Emergency