Demographic Shifts Threaten Economic Stability, Urgent Action Needed

The European Bank for Reconstruction and Development warns that aging populations are destabilizing long-term economic prospects, particularly in emerging European economies. The report highlights the shrinking workforce's impact on GDP growth and stresses the urgency of interventions such as incentivizing longer working careers and private sector expansion.

The European Bank for Reconstruction and Development (EBRD) has urged countries to take swift action to address the economic consequences of slowing population growth. In their annual report, the EBRD highlighted the detrimental effects of aging populations on economic growth, particularly in emerging European nations.

According to the report, the decline in the working-age population is expected to reduce GDP growth by 0.4 percentage points annually from 2024 to 2050. Chief Economist Beata Javorcik noted that post-communist countries are 'getting old before getting rich,' as younger leaders are unable to counteract demographic shifts with current policies.

While some EBRD countries have implemented incentives to boost birth rates, these measures have not been effective. The bank emphasized that migration and increased productivity through AI are not politically viable solutions. Instead, they suggest extending working years and reforming pension schemes as critical steps.

(With inputs from agencies.)