GDP per capita change, 2008-2030


Observations for policy

Annual growth of GDP is used as a proxy for increases in economic activity and production of wealth in European countries and regions. This can result from different factors: First, an increase in exports, linked either to an enhanced competitiveness, or to higher external demand for produced goods or extracted raw materials. Second, improved economic exchanges within the region, as actors improve their capacity to meet local demand. The challenge for forecast models is to take into account these different dimensions and interactions between them. Territorial imbalances can be observed at different geographic levels. Growth of GDP is forecasted to be unevenly distributed in space over the next decades. Mainly regions in Eastern and Central Europe are expected to have a GDP per capita growth similar or higher than the EU27 average. At the sub-national level, capital regions and regions that include larger urban areas are expected to grow faster than more rural regions.

The economic and financial crisis has had a major impact on economic growth in European regions. Catching-up processes that had been observed prior to the crisis were put to a halt. The Sixth Cohesion Report concludes that rural regions have been more resilient to the economic and financial crisis. However, in the aftermath of the crisis their growth levels are in general lower than for urban regions. The ESPON ECR2 project on the contrary concludes that urban regions have proved more resilient. Their conclusion is based on a business cycle approach considering the different peak levels of activity rather than comparing trends before and after a conventionally chosen “year of crisis start”.

Policy context

Growth and jobs are one of the main policy goals of Europe. The objectives from the Europe 2020 strategy, drafted in the light of the economic and financial crisis have been taken forward in EU Cohesion Policy 2014-2020. Eleven thematic objectives have been defined to address regional disparities across European countries and regions and within European countries.

One out of four EU residents lives in a region with GDP per head below 75% of the EU average. These regions are mostly located in Central and Eastern European countries, but also in Greece, Southern Italy, Portugal and most of the outermost regions. As the Sixth Cohesion Report stresses, the economic crisis put a long trend of converging GDP and unemployment rates within the EU to a halt affecting in particular regions in Southern Europe. Meeting the objectives of the Europe 2020 Strategy has become a bigger challenge for these regions. Rural regions have proven to be more resilient during the crisis year.

Cohesion Policy is aimed at diminishing regional disparities between countries and intra-regional disparities within countries. The Sixth Cohesion Report states that Cohesion Policy contributes to the estimated GDP of countries. For the period 2014-2030 for each euro spent in the main beneficiary countries, GDP is expected to be more than three euros higher.

Map interpretation

The map shows that the model forecasts imply an increase in territorial imbalances concerning the distribution of economic activities, measured as GDP per capita and its percentage difference to the EU27 average between 2008 and 2030. Forecast models on economy and demography are applied to calculate the change in GDP in compared to the EU27 average.

At the European level, Central European regions are expected to grow more than the EU average while Northern and Southern regions are expected to experience a lower growth of GDP per capita compared to the European average. Growth levels close to the European average are expected in most Eastern European regions. This includes large parts of Poland, Romania, Bulgaria, Slovakia, Hungary, and Latvia. Growth levels close to the European average are also expected in a number of regions in Finland, Portugal, France and Southern Germany. However, while Slovenia is expected to experience relatively high growth, forecasted growth levels in neighbouring Italian regions are well below European average levels.

Disparate growth levels at the sub-national disparities are forecasted in almost all countries. The most obvious examples are Ireland, Germany, France, the Czech Republic and Austria. In most countries capital regions as well as regions containing major urban centres are expected to experience higher growth than more rural regions. This would imply that regional disparities at national level will increase.

Concepts and methods

The map shows the forecast of relative GDP growth per inhabitant of that region (GDP per capita) between 2008 and 2030 in relation to the average growth of EU27 for the same period. The relative change in GDP is based on a baseline scenario based on economic and demographic development models. This means that the forecast is based on the scenario that current developments in economy (MASST) and demography (MULTIPOLES) continue without major significant changes.

The main assumptions in the MULTIPOLES model are formulated for each component of population change, i.e. for fertility, mortality, and migration. The baseline scenario can be described as a ‘business as usual’ scenario, with no major policy changes and slow economic recovery. For all assumptions, regional and national differences will be still clearly visible. In detail, fertility will remain low in Europe (increase from 1.61 to 1.66 in 2030), life expectancy will increase due to medical advances and lifestyle factors, i.e. for men from 77 (2010) to 81 (2025-2030), and for women from 83 (2010) to 86 (2025-2030). With regards to migration, it is assumed that immigration will increase by 2 per cent every 5 years by 2030-35, in countries strongly affected by the crisis this increase is delayed by 5 years. With regards to intra-European migration, emigration rates will be constant in the least crisis-hit countries, and gradually drop back to pre-crisis values and then remain constant in the most crisis-hit countries (Cyprus, Greece, Italy, Spain, Portugal, Ireland). For internal migration it was assumed that the average level of out-migration rates will remain constant in all countries, migration gains and losses will be flattened, and regional differences in mobility will thus decrease.

The baseline scenario of the MASST3 model can be described as a ‘business-as-usual’ model. With regards to policies this implies that the actual trends continue and that the political, economic and technological framework is influenced by these trends but will not drastically change. With regards to the content, 19 different blocks have been built for the baseline scenario. These refer to European growth, regional disparities, employment rates, unemployment, productivity, R&D, North-South Structural Disequilibrium, Public Debt, Private Debt, Real Estate speculative bubble, Stable inflation, Trade, Trade by sector, Global finances, Reindustrialisation, Knowledge-based activities, education, service-oriented jobs, intelligent and regional agriculture.