Global Productivity Brief 2023

After surging in 2020, global labor productivity—defined as real GDP per hour worked—disappointed in subsequent years and is forecast to expand only modestly in 2023. Even for firms with above-average productivity performance, weak macro-productivity figures should be a cause for concern because of their impact on global economic growth.

Insights for What’s Ahead

• Most of the weakness in global labor productivity growth is in mature economies, particularly the US and Europe, where growth is weakening rapidly but labor demand is still buoyant. Emerging economies should fare better, particularly in Asia.
• Slow productivity growth rates limit the growth potential of economies globally, due to adverse demographics limiting further increases in labor supply.
• While productivity growth is forecast to disappoint in 2023, the future is highly uncertain. Positive factors that might spur growth include technological breakthroughs; negative factors include heightened economic and geopolitical uncertainty and the overall increasing cost of capital.