Total Economy Database™ - Key Findings
JANUARY 2014 UPDATE
Global productivity slowdown moderated in 2013, but 2014 may see better performance
The global economy witnessed a deceleration in labor productivity growth for the third consecutive year. Yet, compared to the intensity of the slowdown in previous years, the 2013 decline was modest. Labor productivity growth, measured as the average change in output per person employed, declined from 3.9 percent in 2010 to 2.6 percent in 2011, 1.8 percent in 2012, and 1.7 percent in 2013.
- The moderation in the productivity decline is mainly the result of a stabilization of productivity growth rates in mature economies at 0.9 percent. Labor productivity growth in the United States remained at 0.9 percent in 2013. Europe even saw some improvement in output per person employed—from 0.1 percent in 2012 to 0.5 percent in 2013 (for the Euro Area from −0.1 percent in 2012 to 0.4 percent in 2013)—as the output contraction due to the recession abated. However, emerging economies saw a further slowdown in productivity growth (even if their overall rate was relatively strong compared to mature economies) as a result of weaker growth performance in some of the larger economies, such as China, India, Brazil, and Mexico. Overall, labor productivity growth in emerging and developing economies slowed from 3.7 percent in 2012 to 3.3 percent in 2013.
- One dramatic result from this year’s estimates in The Conference Board Total Economy Database is that the growth rate of total factor productivity, which measures the productivity of labor and capital together, is less than zero for the global economy. This indicates a stalling in the efficiency of optimally allocating and using resources. This stalling appears to be the result of slowing demand in recent years, which caused a drop in productive use of resources that is possibly related to a combination of market rigidities and stagnating innovation.
- For 2014, we may expect a moderate improvement in global labor productivity growth to 2.3 percent (up from 1.7 percent in 2013), mainly as a result of improved growth performance in mature economies (up to 1.5 percent in 2014 from 0.9 percent in 2013). Also, emerging and developing economies may see a moderate improvement in productivity growth. However, at 3.6 percent in 2014, their growth rates will stabilize at much lower levels than experienced during the first decade of the century, when productivity growth rates ranged between 5 and 7 percent.
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