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Vathia, a deserted village in the mountains overlooking the sea, is now a
popular tourist destination, Mani, Peloponnese, Greece.
Heritage Images | Hulton Archive | Getty Images

Europe Economy


GREECE’S GHOST TOWNS OFFER A GLIMPSE OF A COUNTRY STRUGGLING WITH ‘EXISTENTIAL’
POPULATION COLLAPSE

Published Wed, Dec 11 20241:11 AM ESTUpdated Wed, Dec 11 20246:37 AM EST
Karen Gilchrist@_karengilchrist
WATCH LIVE
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Key Points
 * Greece’s abandoned “ghost” towns and villages offer an eerie glimpse into the
   future of a country, whose prime minister has warned of “existential”
   population collapse. 
 * Years of decreasing births, economic hardship and mass emigration have left
   huge swathes of the country vacant.
 * Economists warn that population decline is now putting a major strain on
   society – with not enough young workers to grow the economy and support the
   elderly.

A cafe offers a glimpse into the past in the abandoned village of Lasta. There
are no staff but instead an honor system, which allows visitors to serve
themselves a coffee in exchange for a donation.
CNBC

Lasta, GREECE — There’s nobody around anymore to man Saint George cafe in Lasta,
a mountainous village in Greece’s Peloponnese region.

Instead, there’s an honor system — just take a drink, leave a donation and soak
up the relics of a bygone era.



Photos of lively residents on the walls belie the reality outside, where a
deserted square, abandoned school and derelict houses offer an eerie glimpse
into the future of a country at risk of population collapse. 

Lasta is just one of hundreds of depopulated or abandoned “ghost” towns and
villages scattered across Greece, in an all too visible marker of years of
declining births, economic hardship and mass emigration.

Economists warn that population decline is now putting a major strain on a
country just emerging from crisis — with not enough young people to support the
economy over coming generations.

“While Greece is seeing very solid growth for the moment, looking ahead, with
fewer people to do the work, that’s going to be difficult to sustain,” Bert
Colijn, chief economist at ING, told CNBC by phone.


FALLING BIRTH RATE AN ‘EXISTENTIAL’ THREAT

Greece is home to one of the lowest fertility rates in Europe: At 1.3, it is
half that recorded in 1950 and well below the 2.1 required for population
replacement.



Last year, the country recorded just over 71,400 births, the lowest number since
records began almost a century ago, and down around 6% on 2022. Greece now has
around one birth for every two deaths, and the share of the population aged over
65 is nearly twice that aged 0 to 14.

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That prompted Prime Minister Kyriakos Mitsotakis to warn of an “existential”
threat to Greek society, with the country more disposed than most to wider
demographic shifts afflicting developed nations.

“The truth is that today our people are among the most elderly in Europe,”
Mitsotakis said last year, speaking at a Greek demographic conference.

It’s an issue affecting some pockets of the Greek mainland and its vast
archipelago more than others.

> Local provisions are also needed, with the overall demographic collapse
> literally becoming an existential bet for our future.
> Kyriakos Mitsotakis
> Prime Minister of Greece

“This population decline is not manifested equally throughout the country,”
Mitsotakis continued. “It has peaks in specific areas and this means that
national strategies are not sufficient and local provisions are also needed,
with the overall demographic collapse literally becoming an existential bet for
our future.”

That decline is most visible through the emergence of scores of ghost towns and
villages — locations with none or virtually nil inhabitants, deserted as local
populations leave or die out. It can be difficult to quantify the exact number
of such locations, given their often remote nature, but recent estimates put the
figure of entirely abandoned towns and villages close to 200.

This school, established in 1885, educated generations of children in Lasta and
the surrounding area before closing its doors due to a lack of pupils.
CNBC

Many are all but forgotten, with decrepit buildings the only signs of former
life. Others like Lasta, meanwhile, have become sources of offbeat tourism, with
visitors to the cafe and abandoned buildings keen to experience a piece of
history.

At Greece’s last census in 2021, Lasta had a reported permanent population of
12, but when CNBC visited in 2024 there were no signs of permanent residents.


REMNANTS OF THE GREEK FINANCIAL CRISIS

Greece’s recent demographic decline can be largely traced back to the country’s
sovereign debt crisis of 2009. Resultant bailout programs sparked years of
austerity and financial woe for the country, with the economy contracting by as
much as a quarter over the ensuing decade.

Young people were among the hardest hit by the downturn, with youth unemployment
peaking at 59.5% in the first quarter of 2013 — more than twice the national
high of around 27%.

watch now
VIDEO5:4505:45
Greece’s ‘ghost’ towns show the risks of population decline
Squawk Box Europe


As a result, many were unable to forge new lives outside of their family homes.
Of those who did, many did so overseas, with an estimated more than 400,000
people — or 9% of the workforce — emigrating over the period. Much of the
remainder relocated to Greece’s big cities, in search of better work and
education.

Today, more than half (53.5%) of the Greek population lives in the capital,
Athens, and the surrounding Attiki region, as well as the country’s
second-largest city, Thessaloniki. Meanwhile, all other regions, including
Greece’s prized islands, have recorded population decline over the past several
years.

> We need a shock. We need something that creates, you know, a sense of security
> and sense of optimism.
> Sofia Zacharaki
> Greek minister of social cohesion and family affairs

Many demographers say the country’s population decline stems even further back
to the 1980s — another period of economic decline. A fall in birth rates over
that period has since led to in a reduction in women of childbearing years, with
the proportion of women aged 20 to 40 now 150,000 fewer than five years ago.


INITIATIVES TO SUPPORT POPULATION GROWTH

The government is currently forecasting that the population may fall from around
10.4 million today to 7.5 million by 2050 — a decline of more than a quarter.

To help tackle the issue, Mitsotakis last year launched a new Ministry of Social
Cohesion and Family Affairs to unify and enhance support for children and
vulnerable groups.

In October, the ministry announced that it would spend 20 billion euros ($21
billion) through 2035 on incentives to halt population decline, such as child
benefits, enhanced parental leave and tax breaks. Sofia Zacharaki, who heads up
the office, said the measures were designed to provide a wake-up call to
society.

A deserted home overgrown with plants and foliage — one of many in Lasta, an
abandoned village in Greece’s Arcadia region.
CNBC

“We need a shock. We need something that creates, you know, a sense of security
and sense of optimism, especially in the younger population,” Zacharaki,
minister of social cohesion and family affairs, told CNBC via video call.

“We are faced with not just an economic impact ... but also a mindset issue that
has been instilled in many young people’s minds, probably because of the
recurring crisis and probably a sense of disillusionment,” she continued, adding
that the funding should give more people the choice to start a family.

However, Colijn said he was skeptical that child support measures would be
enough to alter the trend, and that major policy changes would likely also be
needed to support demographic shifts.

“There doesn’t seem to be one example of a policy that’s been introduced
somewhere that has resulted in a swift turnaround in that decline,” he said. He
added that other policies might include incentives to encourage more young
people to remain in Greece, and attracting back those who left.


DEMOGRAPHIC SHIFTS WEIGH ON ECONOMIC GROWTH

Greece’s demographic decline stands at odds with the country’s now much improved
economic outlook.

The Greek economy is projected to grow 2.2% in 2024, and 2.3% in 2025 —
outpacing Europe’s major economies. The country’s initial 2.9% 2025 gross
domestic product (GDP) forecast was revised down only by a wider EU slowdown.

Nevertheless, economists warn that demographic decline could ultimately
undermine that growth over the longer term.

> We are currently in the midst of an unprecedented demographic transition.
> Jim Reid
> Global head of macro research at Deutsche Bank

“Demographic developments are absolutely key to economic growth in general. It’s
about how many hands you have to work and how productive those hands can be,”
Colijn said, highlighting a “strong correlation” between working age population
growth and GDP per capita.

Greece is not alone in this phenomena: Demographic decline is an issue facing
many developed nations. Japan and South Korea, with fertility rates of 1.2 and
0.72 in 2023, respectively, are among the best known examples of countries in
demographic decline. But much of the West, and China too, have rapidly aging
populations and need for greater government support.

Many houses in the area have fallen into disrepair as inhabitants have left to
find work and opportunities in bigger cities.


“We are currently in the midst of an unprecedented demographic transition,
whereby global population growth is continuously slowing, with little obvious
sign that the trend is about to shift,” Jim Reid, Deutsche Bank’s global head of
macro research, wrote in a November report.

“Given that demographics almost certainly deteriorates further in the 2024-2049
QC [quarter century] it stands to reason that ... you would expect another QC of
below long-term average real GDP growth and real equity returns, especially in
the DM [developed market] world,” he added.


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