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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

‘Tougher times’: Sweden’s economy to slow next year

Consumers in Sweden are set to crimp spending over the rest of the year, pushing the country into an economic slowdown, Sweden's official economic forecaster has warned in its latest prognosis.

'Tougher times': Sweden's economy to slow next year

A combination of record high energy prices over the winter, rising interest rates, and inflation at around 10 percent, is set to hit household spending power over the autumn and winter, leading to lower sales for businesses and dragging economic growth down to just 0.5 percent next year. This is down from the 1.2 percent the institute had forecast for 2023 in its spring forecast. 

“I don’t want to be alarmist,” Ylva Hedén Westerdahl, forecasting head at the Swedish National Institute of Economic Research, said at a press conference announcing the new forecast. “We don’t expect the sort of economic slowdown that we saw during the financial crisis or the pandemic, where unemployment rose much more. But having said that, people who don’t have a job will find it tougher to enter the labour market.” 

She said that a shortage of gas in Europe over the winter, will push electricity prices in Sweden to twice the levels seen last winter, while the core interest rate set by Sweden’s Riksbank is set to rise to two percent. 

As a result, Sweden’s unemployment rate will rise slightly to 7.8 percent next year, from 7.7 percent in 2022, which is 0.3 percentage points higher than the institute had previously forecast. 

On the plus side, Westerdahl said that she expected the Riksbank’s increases in interest rates this year and next year would succeed in getting inflation rates in Sweden under control. 

“We expect a steep decline in inflation which is going to return to below two percent by the end of 2023,” she said. “That depends on whether electricity prices fall after the winter, but even other prices are not going to rise as quickly.” 

After the press conference, Sweden’s finance minister, Mikael Damberg, said he broadly agreed with the prognosis. 

“I’ve said previously that we are on the way into tougher times, and that is what the institute confirms,” he told Sweden’s state broadcaster SVT. “There’s somewhat higher growth this year, at the same time as fairly high inflation which will hit many households and make it tougher to live.”

Damberg called on Sweden’s political parties to avoid making high-spending promises in the election campaign, warning that these risked driving up inflation. 

“What’s important in this situation is that we don’t get irresponsible when it comes to economic policy,” he said. “Because when parties make promises left, right and centre, it risks driving up inflation and interest rates even more, so Swedish households have an even tougher time. Right now, it’s important to prioritise.” 

 The call 

Sverige är på väg mot lågkonjunktur enligt Konjunkturinstitutets (KI) senaste prognos. Enligt finansminster Mikael Damberg (S) är det därför viktigt att Sverige sköter sin ekonomi ansvarsfullt och vågar prioritera.

– Jag tror att alla partier behöver vara lite återhållsamma och inte lova för mycket, säger han.

Mikael Damberg tycker att KI tecknar en realistisk bild av Sveriges ekonomiska verklighet.

– Jag har sagt tidigare att vi går mot tuffare tider och det är väl det som KI bekräftar. Något högre tillväxt i år men sämre tillväxtförutsättningar nästa år samt fortsatt ganska hög inflation som slår mot många hushåll och gör det tuffare att leva, säger han.

Och vad vill regeringen göra åt det?

– Det är viktigt att vi i det här läget inte är ansvarslösa i den ekonomiska politiken. För när partier lovar vitt och brett till allt riskerar vi att driva upp inflationen, öka räntan ytterligare och svenska hushåll får det svårare. Nu måste man våga prioritera.

Se intervjun med Damberg om konjunkturläget klippet ovan.

“Electricity prices are going to be twice as high as last winter,” said 

Elpriserna kommer att bli dubbelt så höga som förra vintern, säger Ylva Hedén Westerdahl, chef för Konjunkturinstitutets prognosavdelning, på en pressträff.
Den lågkonjunktur som KI ser framför sig kallar hon trots det för en mjuklandning. Den handlar främst om att människor kommer att ha mindre pengar att konsumera.

“Brist på gas i Europa gör att energipriserna ser ut att bli rekordhöga under vintern”, skriver KI, och ser att inflationen kommer att närma sig 10 procent.

Deras prognos för styrräntan är att den ligger på 2 procent vid årsslutet, vilket gör att inflationen faller tillbaka snabbt under nästa år och Riksbanken låter då räntan ligga still.

KI tillägger att de offentliga finanserna är fortsatt starka och de bedömer att det finns ett budgetutrymme på runt 120 miljarder kronor för de kommande fyra åren.

Vad gäller BNP spår KI en blygsam tillväxt på 0,5 procent nästa år – en nedskrivning från tidigare 1,2 procent.

Prognosen för arbetslösheten under 2023 är 7,8 procent, 0,3 procentenheter högre än tidigare prognos.

Fredrik Fahlman/TT
Johanna Ekström/TT

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