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ECONOMY

Italy heading for demographic ‘crisis’ as population set to shrink by a fifth

Italy, which has for years recorded one of Europe's lowest birth rates, is on track to lose a fifth of its population in 50 years, official data suggests.

Italy heading for demographic 'crisis' as population set to shrink by a fifth
Photo by Andreas SOLARO / AFP

The Istat national statistics agency wrote that the data marked “a potential picture of crisis” in its report on Friday, titled “The future of the population – fewer residents, more older people, smaller families.”

Nearly a quarter of Italy’s population is aged 65 or older, at 23.2 percent, and that is expected to grow to 35 percent by 2050, according to Istat’s estimate.

“The age structure of the population already shows a high imbalance in favour of the older generations and there are currently no factors that might suggest a reversal of this trend,” read the report.

“Demographic forecasts show that there is little likelihood of a turnaround in the number of births in the years to come.”

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Italy’s population is expected to decrease from 59.6 million people in January 2020 to 47.6 million in 2070, it predicted, representing a drop of 20 percent.

Whereas in 2020, the average age of Italians was 45.7, it is expected to rise to 50.7 by 2050, Istat said.

And continuing a trend begun in 2007, in which deaths have surpassed births each year, within less than three decades, deaths are expected to outweigh births by a factor of two, 784,000 against 391,000.

Istat wrote that immigration from abroad to Italy should begin to recover after the Covid-19 pandemic, and beginning in 2023 regain its pre-pandemic average levels at about 280,000 immigrants per year, although that is expected to decrease gradually to 244,000 annually by 2070.

Emigration, which is also expected to recover its pre-pandemic levels, is expected to decrease from 145,000 annual departures in 2025 to 126,000 in 2070.

Italy’s population is getting older as fewer births are recorded. Photo by Paolo Bendandi on Unsplash

Last year, the Italian population shrank by almost 400,000 — roughly the size of the city of Florence — as deaths peaked, births bottomed out and immigration slowed down.

In 2012, Italy saw births fall to the lowest level since it became a nation state in 1861, to around 534,000. Since then, new record lows have been established every year.

In 2020, as coronavirus swept the country, the figure fell to 404,000.

How Italy is responding to the population drop

Italy has long counted among one of the lowest birth rates in Europe, and the situation has only been made worse by the coronavirus crisis.

In reaction to continuously falling birth rates, the Italian government vowed to support women and couples to have a family, including the introduction of a universal single allowance.

The authorities gave the green light to the measure earlier this month, providing a monthly benefit to those who have children, from the seventh month of pregnancy until the child reaches the age of 21.

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What a family receives is based on household income, according to the socio-economic indicator the government uses to calculate benefits, known as ISEE.

Approved by Italy’s government cabinet, the Council of Ministers, the single and universal child allowance (L’assegno unico e universale) varies depending on the ISEE and the age of the children, except for disabled children for whom there is no age limit.

It ranges from €175 to €50 per month for each child under 18, while from 18 to 21 years old, the contribution is on a scale from €85 to €25.

The allowance unifies and replaces a series of measures to support families – hence the term ‘unico‘. It’s also called ‘universal’ because it is granted to all families with dependent children resident in Italy.

Families can begin applying for the new benefit from January 1st 2022, although there is currently a temporary ‘bridge allowance’ in place to cover groups of families that have so far been excluded from government family help.

Introduced in July, families can submit an application under the current interim rules for financial assistance until December 31st.

The universal single allowance forms part of the country’s wider strategy, its so-called Family Act, which is intended to help make starting a family in the country a more affordable and realistic prospect.

The benefit can be accessed by anyone who pays taxes in Italy and has been resident in the country for at least two years.

Italian and EU citizens and holders of residence permits for work or research purposes for at least six months are eligible.

Member comments

  1. “It ranges from €175 to €50 per month for each child under 18, while from 18 to 21 years old, the contribution is on a scale from €85 to €25.”

    Will this scale with deflation? Else, show me the denominators!

  2. the little economic benefits to families with small children are a welcome measure, surely, but they do nothing to counter the “brain drain”, as the young adults basically leave Italy when it becomes impossible to find work here. I believe money would have been better spent in creating work opportunities for youth.

  3. It boggles my mind that Italy makes it so difficult to move there or to stay for any length of time given the economy. Although we’re retired and therefore have no (small) children, our support of the local economy could make a difference overall. We might consider relocating if it weren’t such a PITA.

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ECONOMY

How is Denmark’s economy handling inflation and rate rises?

Denmark's economy is now expected to avoid a recession in the coming years, with fewer people losing their jobs than expected, despite high levels of inflation and rising interest rates, The Danish Economic Council has said in a new report.

How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year. 

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’,  Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.  

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn. 

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment? 

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024  about 1 percent below the estimated structural level. 

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending? 

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”.  The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”. 

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025. 

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023. 

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write. 

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers. 

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.” 

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