Europe: Growth resilience versus demographic drag – BNP Paribas

FXStreet Insights Team FXStreet

BNP Paribas highlights that Central European economies are holding up well despite a shrinking population and working-age cohort. The bank notes continued support from EU funds, strong productivity gains relative to wages, and a highly educated workforce. It also flags medium-term risks to competitiveness and potential growth from worsening demographics by 2030.

Demographic headwinds versus structural supports

"By 2030, demographic trends are expected to deteriorate further, raising concerns about potential upward wage pressures, a loss of competitiveness and a structural weakening of potential growth."

"Despite demographic headwinds, the economies of Central Europe have fared rather well so far, primarily due to several key factors:"

"Support from EU funds is expected to continue, and these countries will remain net beneficiaries in the medium term."

"Over the past two decades, productivity growth has outpaced wage costs."

"This has enabled Central European countries to gain market share in Germany, as well as to achieve notable economic convergence with developed economies."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

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