Europe’s ageing economy may just find that the biggest refugee crisis since World War Two gives it a new lease of life - even if huge uncertainty about the future scale of immigration and how refugees are integrated cloud any long-range forecasting.
With winter approaching, the dramatic flow into Europe this year of people fleeing poverty and war in the Middle East and Africa slowed only marginally in September.
Some 170,000 ‘irregular migrants’ entered the European Union last month, according to the bloc’s border agency Frontex, taking the total for the year so far to 710,000.
That’s already almost three times the number for all of 2014 and is widely forecast to top 1mn by year-end.
Some private estimates are for net immigration into the 19-nation eurozone this year of as many as 1.6mn people.
For months, stories of human tragedy and endeavour have jostled with tales of chaos and confusion on Europe’s land and sea borders. In the process, the institutional shortcomings of the European Union were exposed as it struggled to decide how many to take in and where to register and settle them.
Germany committed to taking 800,000 asylum seekers on its own. The EU plans to distribute 120,000 across its 28 members.
But as the weeks and headlines have passed, economists too have been forced to make assessments of what this migrant shock could mean for such a relatively rich economy, but one that has been staring at years of ebbing birth rates, workforces and achievable economic growth rates.
Although laced with caveats, most forecasters quickly flag up the positive impact migrants may have on waning working age populations and evaporating ‘potential growth’ rates - defined as the sustainable pace possible without stoking inflation.
Estimates of euro potential growth had slumped alarmingly below 1% since the financial crash seven years ago, with a legacy of debt and dour demographics meaning few saw an upturn without surging immigration or higher retirement ages.
Just who is rescuing whom in this crisis becomes a moot point.
Swiss bank Credit Suisse said it’s now working off estimates that over the next five years net immigration will boost the euro area’s population by about 5mn, equivalent to 1.5% of the current 340mn.
And assuming public spending to provide for those granted asylum has a one-for-one ‘multiplier’ on gross domestic product, it reckoned that adds 0.2-0.3 percentage points to euro growth next year.
More durably, euro ‘potential output’ growth will be lifted by 0.2 points above official assumptions to 1.3% on average over the eight years through 2023, the Credit Suisse report added, with growth this year alone exceeding European Commission forecasts by up to half a percentage point.
“The positive effects are likely to be front-loaded given the needs for housing and the fact that the marginal propensity to consume for people who arrive with almost nothing is roughly one,” it said. But “economic growth should continue to benefit in coming years as young migrants start to become integrated into the labour market.”