Portugal is one of a group of countries where an aging population will have the biggest negative impact on economic growth. According to Moody's simulation, the impact on gross domestic product (GDP) over the next two decades is significant and could represent a potential decline in GDP to or below this value, namely economic stagnation.
"In the absence of productivity growth or other measures that drive growth potential," the effects of aging are greatest in five of the 12 countries analyzed, including Portugal.
On the other hand, "under the assumption that there is no compensation policy, Germany, Spain, Italy, Portugal, Japan and Greece see a sharp slowdown in revenue growth. per capita during most of the 2020s and 2030s, ″ noted a report by the financial rating agency, which was released Wednesday.
Moody's also noted that, because of declining revenues, it also limited the government's ability to reduce the budgetary impact of aging.
The solution is in productivity
"Given the expected demographic development and weak compensation from immigration and increasing labor market participation," Moody's believes that only by "substantial acceleration in productivity growth" can "prevent a slowdown in potential growth rates. Very low."
"This challenge effort is illustrated by the annual productivity growth rate needed to maintain GDP growth potential at the reference level of 1%, assuming the level of real productivity is based on an average of the last 20 years and a gap between two indicators, "said the rating agency. In this case Italy faces a gap followed by Japan, Greece, Portugal and finally Spain.
To offset the economic slowdown, Moody pointed to "investment in technology that encourages greater innovation and efficiency, including artificial intelligence, automation, robotics or shared economics" which can contribute to accelerating productivity growth.
Impact on rating
Negative consequences go beyond GDP, with effects on the ranking public debt. "An aging population will have a significant impact on the credit profile of a series of developed countries," said Moody's analysis.
"While the implications on the country's credit indicators are slowly manifesting, and unless the government adjusts and implements effective mitigation measures, there will be a real impact on economic growth, a drastic slowdown in yields and an increase in debt burden that will weaken. the economic and budgetary situation, "Marie Diron, director of Moody's sovereign risk department, was quoted in a statement released Wednesday.