Assessing Global Potential Output Growth: April 2019

Fares Bounajm, Jean-Philippe Cayen, Michael Francis (), Christopher Hajzler, Kristina Hess, Guillaume Poulin-Bellisle and Peter Selcuk

No 2019-13, Staff Analytical Notes from Bank of Canada

Abstract: This note presents the updated estimates of potential output growth for the global economy through 2021. Global potential output is expected to grow by 3.3 per cent per year over the projection horizon. Two common themes are weighing on potential output growth across regions: trade disputes, which are reducing total factor productivity growth in the United States and China; and aging, which is having a negative impact on labour force participation in the United States, China, the euro area and Japan. While potential output growth is expected to remain fairly stable in the United States, there are offsetting dynamics across other regions. In emerging-market economies, potential growth is projected to strengthen, mainly due to a recovery of investment as well as structural reforms contributing to total factor productivity growth. Potential output is expected to slow in Japan, China and the euro area, as the effects on growth of population aging and declining labour inputs intensify in these regions over the next three years. A moderation in investment growth will also contribute to slower potential growth in China.

Keywords: International topics; Potential output; Productivity (search for similar items in EconPapers)
JEL-codes: E10 E20 O4 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2019-05
New Economics Papers: this item is included in nep-cna, nep-eff and nep-mac
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Citations: View citations in EconPapers (2)

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