(Reuters, London) The European Bank for Reconstruction and Development (EBRD) has warned that countries must act immediately to prevent severe damage to their long-term economic prospects as population growth slows.
According to a semi-annual report released Tuesday (November 25), population aging has begun to drag down economic growth in some countries. In emerging European countries, GDP growth per capita is expected to decline by nearly 0.4 percentage points annually between 2024 and 2050 due to a declining working-age population.
EBRD Chief Economist Beata Javorcik told Reuters, “Demographic changes are now beginning to weaken living standards and will become a drag on GDP growth in the future.”
Post-communist countries are “aging before they get rich”
She noted that post-communist countries are “aging before they get rich,” with a median age of 37 and a GDP per capita of only $10,000, about a quarter of what it was in the 1990s when advanced economies reached the same median age.
The report points out that many factors contribute to declining birth rates, including changes in social norms and reduced earnings for women in the workplace due to childbirth. Almost all EBRD member countries have attempted to boost birth rates, but these measures have failed to produce meaningful and lasting changes in any country.
Further Reading
In most countries, the scale of immigration needed to offset declining birth rates is politically unacceptable. Many also have reservations about using artificial intelligence (AI) to boost productivity.
Yavorczyk says the most effective approach is to extend the working years of workers. This means retraining and potentially requiring governments to reform pension systems. She says, “We need to have a rational dialogue with voters…especially to ensure younger voters are fully informed, as they will bear the burden of pay-as-you-go pension systems.”
The report also notes that while parts of Central Asia, as well as the southern and eastern Mediterranean, are still enjoying the benefits of a younger population, these regions will soon experience aging populations.
Yavorczyk advises the newest members of the EBRD, including young developing countries like Nigeria, to focus on promoting job growth and expanding the private sector, because “the demographic dividend they can enjoy is short-lived.”
