Average potential global economic growth will slump to a three-decade low of 2.2 per cent per year through 2030, ushering in a “lost decade” for the world’s economy, unless policy-makers adopt ambitious initiatives to boost labour supply, productivity and investment, the World Bank warned on Monday.
“A lost decade could be in the making for the global economy,” said World Bank chief economist Indermit Gill, although he said policies that incentivize work, increase productivity, and accelerate investment could reverse the trend. The average GDP growth rate is a sort of “speed limit” for the global economy, charting the maximum long-term rate at which it can grow without sparking excess inflation.
Low investment will also slow growth in developing economies, with their average GDP growth dropping to 4 per cent for the rest of the 2020s, from 5 per cent in 2011-2021 and 6 per cent from 2000-2010.
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