But seriously, the story is pretty informative
From ekathimerini, September 3:
The Greek economy went off the rails in 2009 with a large fiscal deficit, an external current account deficit, a drop in productivity, and a jump in public debt. The ensuing crisis burst onto the international scene in 2010 with the beginning of a series of economic programs with partner countries, European institutions, and the IMF, to try and steady the listing economic ship. Eight years later we can summarize that national income collapsed by about a quarter, the unemployment rate peaked at 27.5 percent, and the country went through significant political and social turmoil. In more recent years, with stops and starts, the economy has begun to level off and stabilize. We are now in the “second 5-year period” (2016-2020) of this crisis decade, and some interesting data from the first 5-year period are starting to settle down as well, so that we can begin a reflection about the deeper influence of the economic crisis on Greek society. (Data are understandably preliminary in the heat of the present; it takes about 5 years for measurement to solidify.)
If one wants to understand the basics of any macroeconomy, one has to start by studying population and demographic data. The macroeconomy is anchored in the size and dynamics of the population. There is also an important feedback effect from economic management to the size of the population and its demographic developments. When an economy is well managed and the fortunes of its citizens are developing adequately, population dynamics tend to be stable and families have the financial confidence to have children. In societies that are poorly governed or have come under strong economic stress, population dynamics can be interrupted and families can have a tendency to leave and/or have fewer children. There are, of course, many other social, cultural, and personal influences on family planning and demographic developments, but economic confidence is one of the fundamentals that play a role. This “Note for Discussion” presents data from ELSTAT submitted to EUROSTAT on population and demographic developments that offer insight as to the circular, or inter-active, link between economics and demographics. This note offers a hypothesis of what may be going on below the surface. The reader may agree or disagree; all discussion and comments are welcome.
Figure 1 shows the population (POP) of Greece since 1960, appended by the latest projections from the Greek authorities, as submitted by ELSTAT to Eurostat. The data are used as presented and no filtering has been applied. If the data are incorrect, the diagnosis or hypothesis of what is going on may also be incorrect. It goes to show how important it is to present accurate data without worrying whether these data may be “pleasant” or “unpleasant.”
The reader will see two lines in Figure 1 on population: an upper dashed line, which shows the demographic projections available in 2011 based on information and tendencies that were known at that time. These projections carried through 2060 (a horizon of some 50 years). The lower solid line shows the vintage of projections that I downloaded in 2018, and these carry through 2080 (a horizon of some 60 years). It is at once evident that ELSTAT/EUROSTAT have updated the projections considerably, based on data that have come in for the period 2010-2015: the projections for population and population growth have been significantly revised downward, beginning with the onset of the economic crisis in 2009. By 2060, the population estimate is now some 2.4 million persons less than were projected in the 2011 data. This is critical for government policy in managing the economy, and we can dig deeper why this is the case.
Notice in Figure 1 that the new population line has a pronounced kink in 2011; before this date the population was growing slowly and projected to transition to a gradual decline as aging set in for future years. In the new data, 2011 was a peak and the population has started to decline steadily thereafter. This coincides with the economic recession and the stress this put on families and society more broadly—Greeks started to look for their fortunes outside of the country and outward migrated to other European countries and farther afield—causing the domestic population to decline. It is possible that data will be further revised in a next iteration, but such a pronounced kink in population growth is not often seen in other countries. It is one indicator that the recession had a substantial impact on Greece.
A smaller population in future means that the economy will also be smaller, as compared with the expectations at the beginning of this decade. With fewer persons, there will be less consumption and less investment and a lower absolute level of employment. The potential for the size of the Greek economy (the level of overall activity) is hereby reduced. Since Greece is coming into this projection with high debt, the smaller economy means that debt per capita (per person in Greece) is higher than was projected before, and this adds to the challenge how to manage over time the reduction in this debt. This underscores the sense that many Greek persons have that the crisis is past its most impactful immediate point (the recession), but the aftermath is far from resolved—the economy will require careful data-based management going forward to manage the challenges from high debt and declining population dynamics.
Let us dig one level deeper and see what happens to the population of working age—those between 15-64 years of age. ELSTAT/EUROSTAT report on this subgroup of the population as well. Figure 2 shows the dynamics of the “working-age population” (WAP) as reported by these institutions....MORE
