Bank: Older population is economic threat

  • 2007-06-27
  • By TBT staff
VILNIUS - The World Bank has stated in a report that the aging populations of East European countries could threaten the region's admirable economic achievements since casting away their centralized economies in the early 1990s.
The authors of the report, which focuses on the effect of aging on the economies in 28 countries currently in transition to mature market economies, concluded that if these nations do not undertake long-term reforms that tackle demographic trends such as birthrate, as well as reforms in the areas of healthcare and pension systems, the region will have one of the highest proportions of old aged people in the world.

In the authors' opinion, aging population has created a risk of dire economic consequences for the entire world, though the situation in the former Soviet Union countries, as compared to the wealthy industrial countries, is aggravated by the relatively high poverty level as well as incomplete transition to a market economy.
The World Bank estimates that the region's population will shrink by almost 24 million over the next two decades and the proportion of people over 65 years of age to increase to 20-25 percent.
The report says that the impact of the situation will be much heavier in the smallest countries of the region, such as the Baltic states. 
Bank experts specifically mention Latvia and Lithuania as the countries where the population will shrink by more than 10 percent in the next decades in contrast to the current populations of 2.3 million and 3.4 million respectively.
The estimated decrease in the Estonian population before 2025 is 100,000, the reports says.
To be sure, Estonia has made considerable strides in reversing the trend of achieving the replacement rate, including the establishment of a ministry specifically designated to addressing population issues.
World Bank analysts are especially concerned that the aging populations will exert new pressures on public spending, especially for pensions and long-term care for the elderly.

"The countries of the region are not fully aware of the problem, and the development of strategies and corresponding institutions to diminish the effect of the increasing expenditures has not been started," the report says.
If the former Soviet Union countries wish the fast economic growth to continue, it is clear that an increase in the birthrate is necessary, the authors of the report say.
Latvia's population shrank by 13,300 people during 2006, according to statistics. At the beginning of 2007 there were 2.28 million people living in the Baltic state, the central statistics office reported earlier. The population has continued declining at an increasing rate, which in 2006 was 0.58 percent.
In Lithuania, the number of people at the start of 2007 was 3.38 million, down from 3.4 million at the beginning of 2006.

In Estonia, the total population as of the end of May was 1.342 million, down from 1.344 million last year. In 2000, the country had a population of 1.37 million, according to Statistics Estonia.