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The coronavirus disease (COVID-19) virus spread in Europe
overwhelmed even the strongest health systems and resulted in
peaking excess deaths (the percentage of additional deaths compared
to the average number of deaths in the same month of the period
2016-2019) in April and again starting November last year. The
COVID-19 outbreak increased economic uncertainty and health risks,
but also disrupted marriage markets. Moreover, experience from the
last pandemics and other high mortality events suggests that a peak
in deaths is followed by a dip in births with approximately nine
months lag.
Indeed dynamics of births deteriorate in most European countries
(for which data is available) at the beginning of 2021 in the
aftermath of quarantine, which was introduced in March 2020 and
first peak in excess death a month later. Later some rebound in
births has been recorded as well, however, the situation differed
among countries.
Italy and Spain recorded rather high excess mortality during the
first wave of the virus, and both countries have witnessed an
acceleration in the decline in births in the first quarter of 2021.
The trough in births was reached about 8-11 months after the peak
in excess deaths. In Poland, excess mortality in April 2020 was not
peaking, but the number of births contracted strongly in January
2021. That suggests that the fear of virus and news from other
countries could have played a role despite the fact that COVID-19
was still having less material impact at home at a time.
However, some countries have fared better than others. The
annual growth in the number of births in the Netherlands during the
last three months reached 8.2% in May and was the highest since
1998. In Finland growth reached close to 8% in June - a historical
high. In Germany, Slovakia and Denmark growth was the highest since
2017.
Our analysis shows that further dips in birth in the near future
are likely. The number of births in Poland is likely to be hit once
more towards the second half of 2021 and the beginning of 2022.
Repeated dips in births could be again expected in the five most
populous countries in the EU as well. Excess mortality was higher
in Germany during the second wave and just as high as during the
first wave in Italy. Excess deaths remained considerably high in
France as well.
At the other end of the spectrum, Nordic countries (with the
exception of Sweden which has resisted the strict lockdown) have
experienced the lowest excess mortality which can shield fertility
rates in those countries.
The strength of the recovery in labor markets and diverging
pandemic experience can result in diverging trends in some country
groups. Unemployment could remain higher in some countries as
certain sectors do not regain their pre-crisis capacity or are
unable to adapt. This does not bode well for tourism-dependent
South European economies, which already have one of the lowest
fertility rates in the EU. Spain, Italy, and Portugal have also
experienced higher excess mortality and could see their fertility
rates deteriorating faster. Highly indebted rapidly aging South
European economies would see their pension systems squeezed even
more and would become more dependent on labor immigration to
sustain potential growth.
On the other hand, more resilient Nordic countries managed to
limit damages to their health systems and therefore their
economies. They could see more rebound in fertility rates amid
strengthening labor markets and a boost to certainty regarding the
future. That would be good news for Finland, which has seen the
strongest decline in total fertility in recent years as the
fertility rate reached all times lows in 2019. However, the risk
remains that it could be a temporary spike as economic conditions
and personal preferences, which had been driving fertility decline
in the past, could prevail again.
Fertility rates fell below the replacement rate in most of the
European countries since the nineties. Coupled with a rising life
expectancy, we see an impact on population structure as more people
are leaving the labor force and fewer are entering.
In addition to the squeeze on pension and health systems, a
lower share of working-age people in the total population will have
a negative impact on economic growth. Not just from lower numbers
but also due to the changing structure of the labor force, which
can influence productivity. Research shows, that labor force aging
is having a sizable negative effect on European productivity and
further deterioration in fertility rates can aggravate the negative
impact further.
Posted 14 September 2021 by Vaiva Seckute, Principal Economist, IHS Markit
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May 13
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