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The
ratings agency looked at 58 nations to assess the economic
consequences of demographic changes and concluded that unless
countries implemented reforms, more than a quarter of them could
have "speculative-grade", or junk, ratings by 2050.
A 2013 report by the agency, which covered fewer countries,
found that 60 percent could see their debt being rated as junk
by mid-century.
"Over the last five to six years, many sovereigns have
introduced structural reforms, and at the same time they have
been reducing deficits, which widened very significantly in the
aftermath of the financial crisis in 2008," said Marko Mrsnik,
director of sovereign ratings and one of the report's authors.
But Mrsnik said there were "steep challenges ahead", with
governments facing a tough balancing act between ensuring
sustainability while preventing a rise in inequality and
poverty.
Emerging economies were in a more difficult position overall, as
the benefits of having a generally younger population in the
near term would be followed by the challenge of a rapid
demographic shift down the line.
"There is still is a demographic dividend – they still have high
fertility rates, they are still experiencing an increase in life
expectancy, so that means there is still potential for them to
reap benefits of this dividend," said Mrsnik.
"But at the same time they should be mindful of the lessons that
are being learned across the advanced sovereigns which means at
some point the demographic shift will be so strong that it will
need to be accompanied by adequate policies."
The report - which covers countries representing 70 percent of
the world's population - found that Ukraine, Brazil, China and
Saudi Arabia would face the fiercest pressure on budgets from
ballooning pension spending.
S&P based its study on demographers' expectations that the ratio
of old-age dependency - the number aged over 65 relative to
those aged 15-64 - will double by 2050 in most countries.
Eastern European countries are expected to see a particularly
steep rise in the ratio, as overall population trends are
amplified by the emigration of young workers.
(Reporting by Karin Strohecker; editing by Andrew Roche)
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