Home > Uncategorized > Austerity-demographics. The unmatched decline of the population from 15 to 64 in the Baltic countries

Austerity-demographics. The unmatched decline of the population from 15 to 64 in the Baltic countries

Baltics

The elephant in the room: austerity-demographics (sizeable out migration in combination with as yet gentle but increasing rate of natural decline in countries with extremely high levels of post 2008 unemployment) exist. And are another reason why harsh austerity is self-defeating.

During the last six years unemployment in the Baltic countries (Latvia, Lithuania, Estonia) shows a consistent decline and, though still very high in Latvia and Lithuania, it is approaching the 5% level in Estonia (graph 1). Good! The pace of the decline is also much faster than for instance in Bulgaria and even Poland, which famously escaped the Great Financial Crisis by (1) unlike the Baltics not having a property bubble financed by a reckless inflow of foreign capital before 2008, (2) unlike the Baltics devaluating its currency in 2008 and (3) unlike the Baltics (which initially raised their interest rates…) aggressively lowering the policy rate of the central bank.

Is there a Baltic secret? Yes. Graph 2 shows that the Baltics knew an unmatched decline of the 15-64 population after 2008.

Demography

I included Belarus and Ukraine (like the Baltics former Soviet bloc countries in more or less the same region and not exactly examples of political stability, free societies and buoyant economic development – when it comes to political stability and free societies the Baltics do much, much better while economic development in the Baltics after, say, 2009 is also more positive than in Belarus and the Ukraine!) to show the severity of the Baltic decline. Mind that Poland has about 40 million inhabitants while Bulgaria has about 7 million inhabitants (down from 9 million in 1989) while Estonia has 1 million inhabitants, Latvia has 2 and Lithuania has 3 and we should not attach too much importance to developments in a single one of these three small countries. But, also looking at developments in Greece and (especially since 2012) Spain it is clear that in the medium run, austerity-demographics (sizeable out-migration in combination with a slight but increasing natural decrease of the population) will disable the extent to which these countries are able to pay back their debts. Austerity, Euro style, is not only self-defeating in the sense that it shrinks the economy – it even shrinks populations. It is, for this reason, to be expected that quite soon the Eurocrats will propose and end to the free movement of EU citizens within the EU.
Aside – as fertility in Turkey is around the replacement level, the relatively fast increase of its population from 15-64 will gradually decline.

  1. September 17, 2015 at 3:09 pm

    Very interesting. Some of this change is proximity to endless war. I wonder if there is someone with a mathematical flair who might factor out the expected change in population from these countries which is due to the expected decline in population due to increased education.

    The center range, say Portugal to Belgium, might make a good multivariate analysis similar to the Gilens and Page analysis of US democracy.

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