Moody's Warning on Aging Population and Public Finances

Credit rating agency Moody's announced that the rapidly growing elderly population in the Western world and emerging markets, including Turkey, will create an unsustainable burden on budgets. Moody's emphasized that a shrinking working population and rising public expenditures will strain fiscal balances.

Global Population Projections

According to European Commission data, the EU population is expected to peak as early as 2029 and then enter a long-term decline. In the US, population growth is projected to continue longer, with the country's population not peaking until 2080.

Demographic Pressures and Costs

According to Moody's, the main problem arises before the population actually shrinks. An aging population reduces the number of working-age people while increasing pension, healthcare, and long-term care expenses. In G7 countries, there are currently three workers for every person over 65, and this ratio is expected to drop to two by 2050. Moody's Vice President Olivier Chemla stated that this situation will create pressure on economic growth and public finances.

Technological Solutions and Emerging Countries

The report stated that artificial intelligence and productivity gains could partially alleviate the problems but would not be sufficient on their own. It noted that while robots can increase production, they leave a gap on the demand side since they are not consumers. It was emphasized that emerging countries such as China, Brazil, Thailand, and Turkey are also facing this trend and will grapple with these costs at lower income levels.