Productivity trend suggests policymakers should stop obsessing about GDP

In China, the authorities feel compelled to react to disappointing growth figures. Their responses create uncertainty and increase market volatility (photo: dpa)
In China, the authorities feel compelled to react to disappointing growth figures. Their responses create uncertainty and increase market volatility (photo: dpa)

Economic growth around the world is below expectations. In particular, the Western economies are not generating the kind of recovery needed to solve the problems accumulated over the past decades. Yet despite missing forecasts, the gross domestic product figures themselves are not dismal. In 2015, GDP growth will be better than 2 per cent in the United States and well above 4 per cent in the developing countries. Both sets of data will probably improve next year.

Future growth scenarios depend heavily on the pace of productivity gains, which have been declining for decades in the developed Western economies. However, measuring productivity is a difficult task, and the methodological p...

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