Latvia Faces Demographic Challenges as Population Declines and Ages
Latvia is experiencing a significant demographic shift, characterized by a projected population decline and an increase in the old-age dependency ratio. Economist Holger Zschaepitz highlighted that by 2050, Latvia's population is expected to decrease by 20%, leaving it with approximately 1.5 million people. Concurrently, the old-age dependency ratio is anticipated to rise by 23 percentage points, while the pension replacement rate is expected to fall by 33 percentage points. This demographic trend poses a risk of increased old-age poverty and necessitates private retirement savings for the working population. The situation in Latvia is part of a broader regional trend affecting the Baltic states, with Lithuania and Estonia also facing population declines and aging populations. The European Commission's 2024 Ageing Report underscores these challenges, noting that the EU's population is expected to start declining from 2029, with significant impacts on Central and Eastern Europe.