Bob Traa: Demographic slowdown has taken toll on Greek potential growth

Greece’s extended economic crisis has resulted into faster demographic slowdown than previously expected, Bob Traa, the first IMF representative after the country signed its first bailout program, claims in an article published in Kathimerini on Sunday, adding that the trend means that previous projections of future Greek GDP may be too optimistic.

By 2060, it is said in the article, the population estimate is now some 2.4 million people less than 2011 projections. Meanwhile, the working-age population is now estimated to be 1.2 million persons smaller than it was in older projections.

“The loss of population dynamics and especially working-age population dynamics… that are suggested by the new projections and that seem to have been induced by the economic crisis, can have long-term consequences and may have lowered Greek potential growth by about 0.5 percentage points,” Traa says.

“Barring changes in migration and fertility from current assumptions, it may take a full generation (some 30 years) for the Greek population to stabilize from the impact of the economic shock and the influence this had on demographic developments,” he says.

“It is indeed around 2050, some 30 years after the crisis, that the population dynamics converge on the previous estimates that did not anticipate the effects of the economic shock in 2010-2015,” he says.

The analysis is based on data from the Hellenic Statistical Authority (ELSTAT) submitted to the EU statistics office Eurostat on population and demographic developments.