Potential Growth Prospects
Potential output growth around the world slowed over the past two decades. This slowdown is expected to continue in the remainder of the 2020s: global potential growth is projected to average 2.2 percent per year in 2022–30, 0.4 percentage point below its 2011-21 average. Emerging market and developing economies (EMDEs) will face an even steeper slowdown, of about 1.0 percentage point to 4.0 percent per year on average during 2022–30. The slowdown will be widespread, affecting most EMDEs and countries accounting for 70 percent of global GDP. Global potential growth over the remainder of this decade could be even slower than projected in the baseline scenario—by another 0.2–0.9 percentage point a year—if investment growth, improvements in health and education outcomes, or developments in labor markets disappoint, or if adverse events materialize. A menu of policy options is available to help reverse the trend of weakening economic growth, including policies to enhance physical and human capital accumulation; to encourage labor force participation by women and older adults; to improve the efficiency of public spending; and to mitigate and adapt to climate change, including infrastructure investment to facilitate the green transition.
Main Authors: | , , |
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Language: | English |
Published: |
2023-03-10
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Subjects: | GROWTH EXPECTATIONS, PRODUCTION FUNCTION, HUMAN CAPITAL ACCUMULATION, LABOR FORCE PARTICIPATION, EMERGING MARKETS, SLOW GROWTH, |
Online Access: | http://documents.worldbank.org/curated/en/099439203102334334/IDU01dc8e11c0d0ab047d80b7a60e220b64efa9d https://openknowledge.worldbank.org/handle/10986/39553 |
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Summary: | Potential output growth around the
world slowed over the past two decades. This slowdown is
expected to continue in the remainder of the 2020s: global
potential growth is projected to average 2.2 percent per
year in 2022–30, 0.4 percentage point below its 2011-21
average. Emerging market and developing economies (EMDEs)
will face an even steeper slowdown, of about 1.0 percentage
point to 4.0 percent per year on average during 2022–30. The
slowdown will be widespread, affecting most EMDEs and
countries accounting for 70 percent of global GDP. Global
potential growth over the remainder of this decade could be
even slower than projected in the baseline scenario—by
another 0.2–0.9 percentage point a year—if investment
growth, improvements in health and education outcomes, or
developments in labor markets disappoint, or if adverse
events materialize. A menu of policy options is available to
help reverse the trend of weakening economic growth,
including policies to enhance physical and human capital
accumulation; to encourage labor force participation by
women and older adults; to improve the efficiency of public
spending; and to mitigate and adapt to climate change,
including infrastructure investment to facilitate the green transition. |
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