The health and wealth of Portugal.

At a time when Portugal is struggling with budget deficits, public debt, unemployment, slow growth, and austerity – all issues causing a great deal of anxiety at home and much concern throughout the European Union (EU) and beyond – it might seem somewhat secondary to zero in on key features of the country’s demographic and health profile. But the reality is that these features are shaping, and will continue to shape, Portugal’s health profile and its income and wealth trajectories. One of the most salient features transforming Portugal’s demographic profile is a sharp climb in its share of elderly people – a trend that by 2050 will boost the country’s median age sufficiently to make it rank among the world’s “oldest” countries. Is population ageing a blessing or a curse? Certainly, there’s no shortage of economic commentators willing to take a highly alarmist tone. They warn of a host of undesirable phenomena, including workforce shortages, economic growth slowdowns, asset market meltdowns, and the financial collapse of pension and health care systems. Among these doomsday predictions, a particularly striking one is due to Pete Peterson – a past U.S. Secretary of Commerce and former CEO of the now-defunct Lehman Brothers. In a 1999 article, he went so far as to describe global aging as a “threat more grave and certain than those posed by chemical weapons, nuclear proliferation, or ethnic strife.”13 Economic concerns figure prominently in his thinking. This is because older people simply don’t work and save as much as younger adults. But these alarmist views fall apart under close scrutiny for a variety of reasons, which this paper will elaborate. In fact, my intent in this article is to dispel the popular notion that population aging automatically and mechanically translates into economic and social catastrophe. Granted, there is no denying that demographics exert a huge influence on business, politics, economic development, social structures, and our individual and collective futures. But there is wide scope of action to offset the negative and accentuate the positive consequences of population ageing. This paper starts with two relatively new ideas on the importance of health and demography to economic growth, highlights salient features of Portugal’s health and population trends, examines the economic implications of these trends, and explores ways in which Portugal might address the challenges of population ageing – keeping in mind its current and likely continuing austerity pressures.