EVA Report: Aging significantly slows down Finland’s economic growth

Population Aging is the main reason for the slowdown in Finland’s economic growth in recent decades, estimated in the recent report of EVA.

Finnvera’s chief economist Mauri Kotamäki The report written by Eva examines the effects of aging on public finances, productivity and risk -taking.

Almost all Member States of the European Union have become strongly older in the last decade, but in Finland, aging has been the steepest in Europe.

The report compares Finland’s situation with Japan. It is an example of an elderly society where economic growth has suddenly stopped and public debt has risen to a worrying level.

“One of the reasons for Japan’s aging is to limit immigration policy,” Kotamäki writes in the report.

Report I describe that aging slows down economic growth through many routes.

First of all, aging significantly increases public expenditure, as pension expenditure and health care costs are increasing as a result of aging.

At the same time, the decline in working -age population slows down tax revenue and generally economic growth, as there are fewer hands. Productivity is decreasing as older age groups will slowly use new technologies, the report estimates.

Elderly people also take fewer risks, which, according to the report, reduces entrepreneurship and investment.

The report considers that the Finnish economy has also become more service -oriented, because, for example, care services are needed as more and more due to aging. Productivity is dragging because, according to the report, productivity in public service sectors is, on average, lower than in industry.

In addition, aging has probably reduced the natural interest rate of the economy. According to the report, the European Central Bank’s monetary policy is too tight for Finland, as Finland has become more older than the rest of the euro area.

In a solution Kotamäki proposes to increase work -related immigration, increase the employment rate by extending their working lives, and adjusting public finances.

In addition, Kotamäki proposes “strengthening the market economy”, which would mean reducing regulation, demolishing monopoly and increasing folk capitalism.