An expected population decline by mid-century in Central, Eastern and Southeastern Europe as a result of aging and migration and the resultant decline in labor force could reduce the regional countries' GDP by 1 percent annually, International Monetary Fund (IMF) Deputy Managing Director Tao Zhang said on Monday
WASHINGTON (Pakistan Point News / Sputnik - 15th July, 2019) An expected population decline by mid-century in Central, Eastern and Southeastern Europe as a result of aging and migration and the resultant decline in labor force could reduce the regional countries' GDP by 1 percent annually, International Monetary Fund (IMF) Deputy Managing Director Tao Zhang said on Monday."Shrinking labor supply and lower productivity of older workers, together with greater pressure on public finances, could cost countries about 1 percent of GDP per year," Tao Zhang said in remarks at a conference in Dubrovnik, Croatia.
Zhang said new IMF research suggests the population of the region - excluding Turkey - will decline 12 percent by 2050 due to aging and migration, and the reduction in the labor force is likely to decline 25 percent over the same period.
The IMF Deputy Managing Director warned that the labor-related challenges could significantly slow the economies in the region and may have an impact on income.
Zhang pointed out the IMF expects under normal circumstances per capita GDP in the region may reach 74 percent of that in Western Europe by 2050.
"[W]ith the demographic challenges, it [per capita GDP] is projected to reach only 60 percent," Zhang said.
Some countries have chosen to address the issue by attracting foreign workers, a political decision that may be perceived as controversial by some, but noted that absence of foreign workers amid a labor gap will put pressure on other policies.
"Immigration is a political choice, but ruling it out puts a greater burden on other policies," Zhang said.
Among the other approaches, Zhang highlighted the possibility of attracting a greater number of women in the labor market and raising the age of retirement.
Zhang also urged countries in the region to make greater use of new technologies and support comprehensive reforms of their education systems.
