Italy’s Demographic Crisis: The Worst in Europe, According to Scope Ratings

The Demographic Crisis in Italy: An Overview

Italy is currently facing a well-documented demographic crisis, a challenge shared by many European nations and the broader West, juxtaposed against the vibrant growth in Africa and Southeast Asia.
Yet, the pace of demographic decline varies greatly among countries.

According to Scope Ratings, Italy’s demographic outlook is the worst in Europe regarding its potential economic impact between 2023 and 2040, primarily due to a rapid increase in the elderly population, which poses a significant threat to the state’s already debt-laden finances.

Current Demographic Trends in Italy

Statistics reveal that in 2023, Italy recorded a decline in births for the fifteenth consecutive year, reaching a historic low of 379,000 newborns, the least since the country was unified in 1861.

The report highlights that the working-age population in Italy is projected to decrease by almost 19% from 2023 to 2040, marking the largest decline in Europe, surpassing reductions expected in Germany and Spain (both around 14%) and France (2%).
This substantial contraction in the workforce emphasizes “the growing importance of labor market reforms for Italy’s long-term economic prospects.”

Challenges in Employment

Italy’s employment rate is currently the lowest in the EU, standing at 66.3% for individuals aged 20 to 64 compared to the EU average of 75.3%, as reported by Eurostat.

Scope Ratings also pointed out the weak labor participation, particularly among women.
With most employment concentrated in small and medium-sized enterprises, Italy’s real labor productivity has risen by only 0.1% per year from 2014 to 2023, lagging behind the EU average of 0.8%.

The Role of Women in the Workforce

The situation is critical for women, who struggle to balance motherhood and work.
The Bank of Italy has emphasized the urgent need to enhance female employment to support long-term economic growth and ensure the sustainability of public debt, which approaches 3 trillion euros.

Economic Forecast and the Path Ahead

In light of this demographic backdrop, ISTAT has revised its growth forecast for 2023 downwards from 0.9% to 0.7%.
Meanwhile, Economy Minister Giancarlo Giorgetti suggested that the earlier target of 1% growth for the year may not be achievable.

However, Scope Ratings maintains an optimistic outlook, projecting approximately 1% growth for Italy this year and next, in line with the government’s medium-term Structural Budget Plan.

Nonetheless, the underlying demographic crisis remains unresolved, underscoring the urgent need to address public spending, the balance between the workforce and pension resources, and the coverage of social services — all factors intricately tied to population composition.
An unsustainable aging population could confine the country to stagnation.