The global economy’s “speed limit”—the maximum long-term rate at which it can grow without sparking inflation—is set to slump to a three-decade low by 2030. An ambitious policy push is needed to boost productivity and the labor supply, ramp up investment and trade, and harness the potential of the services sector, according to a new report “Falling Long-Term Growth Prospects: Trends, Expectations, and Policies” issued on March 27, 2023.
The report offers the first comprehensive assessment of long-term potential output growth rates in the aftermath of the COVID-19 pandemic and the Russian invasion of Ukraine. These rates can be thought of as the global economy’s “speed limit.”
The report documents a worrisome trend: nearly all the economic forces that powered progress and prosperity over the last three decades are fading. As a result, between 2022 and 2030 average global potential GDP growth is expected to decline by roughly a third from the rate that prevailed in the first decade of this century—to 2.2% a year. For developing economies, the decline will be equally steep: from 6% a year between 2000 and 2010 to 4% a year over the remainder of this decade. These declines would be much steeper in the event of a global financial crisis or a recession.
At this online seminar, the co-editors of the report, Ayhan Kose, Deputy Chief Economist and Director of Prospects Group and Franziska Ohnsorge, Manager of Prospects Group, presented the main findings. Professor Kenichi Ueda, University of Tokyo, shared his comments on the report.
9:30am-11am, Friday, July 14, 2023 (Japan Standard Time)
Deputy Chief Economist and Director of Prospects Group, World Bank Group
Manager of Prospects Group, World Bank
Professor, University of Tokyo