2023 OUTLOOK

TEN COMMENTS TO LOOK AT THE CHALLENGES OF THE NEW YEAR. CHAPTER TWO: DEMOGRAPHICS. AFTER THE DECLINE IN FERTILITY RECORDED DURING COVID, CURRENT INFLATION PRESSURE AND THE GEOPOLITICAL SITUATION DO NOT SUGGEST AN IMPROVEMENT IN EUROPEAN FERTILITY RATES WILL OCCUR. WHICH MEANS THERE IS NO RESPITE FOR THE CHALLENGES ASSOCIATED WITH THE AGING OF OUR SOCIETIES

by Arnstein Aassve, Full Professor of Demography
Translated by Alex Foti

Demography is the glacial science they say. And rightly so, trends in mortality, fertility and migration do not fluctuate much from year to year. But the last two years have been eventful for demography: the COVID pandemic brought a spike in mortality, especially for the older parts of the age distribution, leaving in its wake heartbreaking stories of trauma and despair as people watched, often from a distance, grandparents and loved ones perish to the virus. In many countries, life expectancy actually fell due to the pandemic. Though we are now facing a surge in COVID cases, it is fair to say that our societies are in a different situation compared to two years ago (that assumes of course, that no new sinister mutation of the virus appears in the near future). So what will the next year bring demographically speaking?

Other than a spike in mortality, the pandemic brought about a significant decline in fertility. As we know from many studies (including our own), the presence of existential threat raises people’s uncertainty perception, whereby people, quite naturally, react by holding off any long-term investments – to which child bearing clearly belongs. For countries such as Italy, where the fertility rate has already been critically low for decades, this may seem like particularly bad news. Still, our own studies show that any fertility decline caused by unexpected external shocks is usually short-lived – and this is also the case with the COVID pandemic. Looking at the next 12 months, the bigger shock is now inflation and the erosion of households’ real incomes. The worrisome part here is that there is no sign of a quick resolution to the Russia-Ukraine conflict and the ensuing energy crisis. In fact, most experts expect that the conflict will last for quite some time, maybe years. The ongoing energy crisis will be felt particularly hard in the first part of 2023. In the short run, this is bad news for Europe – also demographically speaking. Inflationary pressures, increased interest rates for homeowners, and a contraction of the European economy, will certainly put considerable financial strain on households across Europe – including Italy. Because let’s face it, children are expensive. In short, every indication is that European fertility rates are unlikely to pick up in the coming year, meaning that there is no respite for the challenges associated with our aging societies, where low fertility is the principal driver.

2023 will also be a year when migration hits the headlines. For Italy the question is whether we will see a policy change with the new government of Georgia Meloni (who has pledged to stop illegal immigration). Illegal immigrants may find Italy less hospitable in the coming year, but it is also true that the new government is constrained in terms of what it can actually implement to stop illegal immigration. Despite recent efforts to hold back immigrants entering Italy by crossing the Mediterranean Sea, the Italian government is restricted by its own legislation and international conventions. What is sure is that migratory pressures from the global South will not abate anytime soon. The other aspect of migration concerns the Russia-Ukraine conflict. At the moment, it is believed that more than 4 million Ukrainians fled their country, the majority of them crossing the borders into the EU. Despite Ukraine making progress on the battle field, there is a sense that this conflict will go on for quite some time and Ukrainian refugees will not be able to return very soon. In fact, as Russian troops are targeting key infrastructure, thereby compromising energy, water and food supply, the more likely scenario is that more Ukrainians feel forced to flee, and this may happen already in the beginning of 2023 when the winter sets in.