Ageing costs: Fitch sees severe long-term impact on Malta

Japan, Ireland and Cyprus face the largest jump in ageing costs over the next decade, while Luxembourg, Belgium, Malta and Slovenia face the most severe impact over the very long term, Fitch rating agency said today. In a report issued this morning, it said that whilst a successful resolution of the current fiscal crisis remains the most important driver for many advanced-economy ratings, without further reform to address the impact of long-term ageing these economies face a second, longer-term fiscal shock. Without the implementation of mitigating reforms the median country analysed in our new report today is projected to see its budget worsen by 0.6% of GDP by 2020 and 4.9% of GDP by 2050. Consequently, many of these countries would experience escalating government debt-to-GDP ratios, with the average EU27 debt-to-GDP projected by Fitch to rise by 6.9% by 2020 and 119.4% by 2050. "Without reforms to boost labour productivity and/or participation rates in many other advanced economies, population ageing will cause potential GDP growth to decline over the long-term, exacerbating the fiscal challenge," the agency said. Few countries face an imminent problem. However, without major...