Riga - While politicians in the Baltic states of Estonia, Latvia and Lithuania concentrate on tackling the economic crisis with austerity plans, lending restrictions and even IMF loans, they may be neglecting another threat to their economic well-being which could eventually be just as damaging.

Figures released this week by the European Union's statistics office, Eurostat, showed populations in the Baltics are shrinking fast, with many more Balts dying each year than are being born.

While Estonia recorded the fourth-largest birth rate in the EU, with 12.2 births per 1,000 inhabitants, it is still losing people faster than it can replace them, with a death rate at 12.8 per thousand.

Yet Estonia fares relatively well compared with the other two Baltic states.

The imbalance is more pronounced in Lithuania, where the birth rate is 10.5 per thousand but the death rate is 13.2. Latvia faces an even quicker decline, with a birth rate of 10.8 per thousand, easily outweighed by a death rate of 14.0.

Such loss rates are unsustainable in the long term and will have serious economic consequences, according to Morten Hansen of the Stockholm School of Economics in Riga.

"It will be bad for the labour market," he told dpa. "Shrinking populations started 18 to 20 years ago, which means that small numbers of people born around that time are starting to come into the labour market. But the number arriving is smaller than the number of people going out at the other end. With time the number of people in the labour market will become relatively smaller, especially compared to the number of pensioners."

"Either you have to tax the working population more. Or if you're not willing to do that, the lives of pensioners will not improve. Many people of working age were tempted to go out of the country to Ireland and the UK and this is exacerbating the problem," he said.

The bad news for the two southernmost Baltic states doesn't end there. Net migration adds to the speed of their population shrinkage as workers continue to seek better employment prospects in Western Europe.

According to Eurostat, Estonia actually managed to attract a small number of migrants, to lose just 0.4 people per thousand in 2008. It is a different story for Latvia and Lithuania, which ended up losing 4.3 and 4.8 people per thousand inhabitants to migration during the year.

Ramune Verikaite, a data analysis manager with Euromonitor International in Vilnius told Deutsche Presse-Agentur dpa that it's easy to assume an ageing population is a good thing.

"A long life is considered as one of the major achievements of humanity," she said. But she added that in societies facing rapid change in the age structure of their population need to adapt at all levels.

Lithuania's total population has been falling since the early 1990s, Verkaite said, and the downward trend will accelerate in the future. She predicts the country's total population will decline at an average rate of more than half of one per cent per year during the period 2000-2020. Between 1980 and 2020 Lithuania will have lost more than 250,000 people - equivalent to more than 8 per cent of the population.

The decline in Latvia is set to be even steeper, Verkaite believes. "By 2020 Latvia's total population will be 400,000 below the figure for 1980, a decline of roughly 16 per cent over the 40- year period. Population losses will occur in most age groups, but some of the largest will be among teenagers and young adults," she predicts.

There is one final element to consider, too. After suffering 50 years of attempted 'Russification' under the Soviet Union, all three Baltic states are wary of their ethnic Russian minorities.

In Lithuania, Russians make up around around 5 per cent of the population, in Estonia the figure is 25 per cent and in Latvia it is as high as 28 per cent. In the Latvian capital, Riga, you are as likely to hear Russian spoken in the street as Latvian.

As a result, many Balts refuse to countenance one obvious solution to the demographic conundrum - immigration from the east.

"You can attract migrants but you have to decide if that is something you want. The policy seems to be that people don't want that because of the ethnic balance problem. It's seen as an unattractive way of doing it," Hansen said.

"What we can hope for is that over the years there will be some general economic growth to help pay for expensive healthcare and benefits for pensioners. But the basic problem is that there are too few providers paying for it." (dpa)