Kissing Babies May Soon Prove Tricky for Italian Politicians

Why you should care

People are leaving Italy in droves — and those who remain aren’t reproducing.

Italy registered the lowest number of births on record last year, as well as the highest-ever number of emigrants — two demographic trends that are weighing on the country’s weak growth prospects and fragile public finances.

The slowing rate of natural population growth exacerbates the demographic difficulties Italy is experiencing because of migration. Last year 157,000 people left Italy, the largest number since the 1990s and an increase of nearly 2,000 people from the previous year. 

Fewer than 440,000 children were born in Italy in 2018, a 4 percent drop from the preceding year and the lowest number since the modern state of Italy was created in 1861.

That’s according to figures from the Italian National Institute of Statistics. The data revised downward initial estimates that had been published earlier this year. Italy is set to be the only major European economy with a shrinking population in the five years to 2020, according to the United Nations. With 23 percent of the population age 65 or above, it has the second-largest share of elderly people in the world after Japan.

The demographic trends translate into a shrinking number of workers: Italy’s working-age population has fallen by 2 percent since 2014. Many of those leaving are at an early stage in their careers, with decades of employment ahead of them. In the United Kingdom, one of the top destinations for Italian emigrants, more than 70 percent of those requesting a national insurance number — enabling them to pay employment taxes — were under 35 in the fiscal year to March.

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Italy is set to be the only major European economy with a shrinking population between 2015 and 2020, according to the United Nations.

Source Kari Kohvakka/Getty

This is a drag on Italy’s economic potential, economists say. The gross domestic product of the eurozone’s third-largest economy is not yet back to pre-crisis levels and Italy’s economic growth is expected to remain stagnant this year.

“Italy faces the prospect of a severe demographic crisis,” says Jack Allen-Reynolds, a senior Europe economist at Capital Economics. “This will weigh on the economy’s long-run growth prospects, and is a key reason why we think that Italy’s potential growth rate is around zero.”

 

The demographic trends bode ill for Italy’s fragile public finances. High spending on pensions is among the reasons for disagreement between Rome and Brussels — it pushes Italy’s deficit up, fueling its public debt-to-GDP ratio, which is the second highest in the European Union after Greece. 

“A shrinking working-age population plays an important part in depressing Italy’s potential growth, which in turn has crucial ramifications for the sustainability of public debt,” says Silvia Dall’Angelo, senior economist at Hermes Investment Management.

Deaths in Italy have outnumbered births since the 1990s, but net immigration has largely offset the decline in natural change.

However, “if Italy’s economy continues to underperform, the country will become a less attractive destination for foreigners,” says Allen. Last year the number of immigrant registrations into Italy dropped by more than 11,000 compared with the previous year. 

Political debate in Italy is focused on immigration, but policymakers should instead worry about emigration, says Andrea Garnero, an economist at the Organization for Economic Cooperation and Development.

Italy “is not attractive for Italians, who leave the country in droves, and also not attractive for foreigners,” he says.

Italy’s net migration pattern is in sharp contrast to Spain, where a 16 percent drop in emigration and a strong economic recovery have helped reverse the country’s post-crisis surge in emigration.

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By Valentina Romei

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