“If these trends continue, global growth over the next decade would likely be sub-3%, compared to just under 4% in the two decades before the pandemic.”
- The long-term outlook for global growth is not promising, largely determined by declining working-age populations and weak investment.
- The secular decline in productivity growth, especially in advanced economies is unlikely to improve in the near term.
- Artificial Intelligence is promising, but its macroeconomic impact will take longer to move the productivity needle.
- Investment in AI-related companies will continue at a healthy pace, which should support AI-related equities as an expanding sector.
Global growth has been on a secular decline since around 2000, with a more pronounced decline following the Global Financial Crisis (GFC). Economists typically cite the sizeable and broad-based slowdown in Total Factor Productivity Growth (TFP) which measures how efficiently labour and capital inputs are used to produce output. Looking back over longer periods, there were strong advances in productivity after WW2 in the advanced economies and in some of the larger emerging market countries in the 1970s to the 90s, partly because they were starting from relatively low levels of per capita incomes. But since around 2000, the slowdown has been broad-based.
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