Why Portugal Wants You

A declining, aging population

What happens when the population of a country declines? What happens when the median age in a country gets older? What are the economic impacts of a population decline?

The actual and projected population of Portugal from World Population Review.

Recent Trends

I found some interesting data on the World Population Review website. (Since I don’t trust everything I read on the internet, I checked out the source. According to mediabiasfactchecker.com, this is a pretty reputable outfit.) It would seem, Portugal’s population is declining at a rate of 0.29%, roughly 30,000 people a year. Compare this to the US where the population is increasing at a rate of 0.61%, the UK with an increase of o.60%, or Canada which is growing at a rate of 0.86%.

Since fertility rates in all these countries are below 2, meaning that births will not offset their parents, population growth reflects immigration. However, in Portugal, significantly more immigration is required to offset the loss in population.

Economic Impacts

I have always thought that a declining population and an aging population were potent recipes for economic decline. Fewer people, I assumed, meant less output, and less investment. Combine this with an older population demanding more health care and more pension, social security, or public income … it seemed to me that these things threatened an economy. But rather than just accept my gut instinct, I actually tried to research the issue online. It seems whether or not population growth is good for economic growth has been a hotly contested issue over the years. But it would seem the Portuguese government believes that this level of population decline, is a reason for concern.

Portugal Trends & Initiatives

According to World Population Review:

Portugal’s population is decreasing at a rate of 0.29%, roughly 30,000 people per year. This is a combination of negative net migration and fewer babies being born. The fertility rate in Portugal is 1.29 births per woman. This has resulted in an increasingly aging population, with the median age at 46.2 years.

Portugal unemployment rate.

Portugal saw an increase in negative net migration starting in 2009. Many countries, of course, were struggling with recession and increased unemployment. This combined with lower wages, caused many younger people to look for employment opportunities in other EU countries. Today Portugal’s wages rank in the bottom half of all EU countries and lower than its closest neighbor Spain:

Minimum Wage Median Wage

Portugal 665 Euros 1004 Euros

Spain 1004 Euros 1784 Euros

While there are efforts to continue to increase wages, Portugal has initiated programs to encourage Portuguese citizens to return home and promote the migration of digital nomads, entrepreneurs, and retirees. The Golden Visa program and NHR tax program offer significant benefits to retirees. While the long-term economic impact of these programs is not yet known, it would seem, at least for now, Portugal wants you.