On September 29th, Carraighill launched “The Matrix”, a suite of new products covering European countries. Germany was the first country covered in The Matrix. We have since published on Sweden and Poland. This post contrasts key findings between these two countries on the topic of population and migration.

They say many hands make light work. Throughout history, countries which expanded their populations saw their economies expand too. China, long the world’s most populated country, dominated the world economy for several centuries. The United States, the current dominant power (24% of world GDP), has the third largest population in the world today.

European countries have seen strong population growth over the centuries but are now facing a century of decline. Birth rates are falling, and inward migration is often met with a lukewarm response.

80 years from now (in 2100), Eurostat forecasts that Latvia’s population will be 43% lower than it is today. Poland’s will be 27% lower and Italy’s will be 15% lower. 16 of the countries shown here see a decline in population and only 8 see an increase. Germany and France are forecast to grow, although only modestly.

Sweden (+32%) and Ireland (+33%) are the only two countries set for strong growth. Sweden’s fertility rate is one of the highest in Europe and inward migration has been encouraged for many decades. Sweden’s high spending on childcare facilitates the higher birth rate, while a policy of accepting refugees from war torn countries facilitates higher net migration.

Poland stands in sharp contrast to Sweden. Where Sweden favours population growth by immigration, Poland prefers natural births.

However, births in Poland are fewer and fewer each year, with the average mother having just 1.5 children.

By the year 2045, deaths will outnumber births by over 200,000 each year. Net migration is forecast to be positive, but not strong enough to reverse the falling population. Poland is aware of these challenges and has implemented an incentive scheme for new births. PLN 500 is given as a monthly payment to each child. This should help, but it has yet to meaningfully reverse the trend.

Poland is currently experiencing strong economic growth, supported by EU subsidies, foreign direct investment and trade. These trends should continue for many years as Poland’s economy converges towards the European average. However, we expect Poland’s growth to slow later in the century as these demographic headwinds grow stronger. The housing market is likely to be especially impacted as the number of people at house buying age (25-44) declines. As this happens, Poland will face a difficult choice about whether it accepts the weaker growth, or responds with more aggressive birth and migration policies.

While we favour Sweden’s long term growth prospects over Poland, we are conscious that all European countries face the problem of an ageing population over the next century. Sweden’s old age dependency ratio will reach 50% by 2085, compared to just 32% today. A strong increase in government spending will be required to support an ageing population, through pensions, healthcare and more. Poland faces the same problem, but to an even greater degree.

If you would like to access the reports mentioned in this article, Carraighill Research Access enables you to access these and other thematic and sectoral research reports through our secure online portal. If you would like to speak to a partner or analyst on the topics raised in this piece, you can contact us here.