Global recovery plagued by weak productivity
Economic growth is synchronized around the world, yet productivity and investment growth continue to lag
An updated tracking index published by Brookings Institution this week confirms that synchronized growth momentum in both advanced and emerging economies continues.
But there’s something conspicuously absent from advanced economies. Productivity has remained stagnant. Falling unemployment and rising capacity utilization point to a solid foundation to the recovery, and low inflation leaves room for continuation of accommodative monetary policy if needed.
Business and consumer confidence on the rise in many advanced and emerging markets, but this has also not led to strength in investment demand.
Despite a healthy outlook for the rest of this year and next, the factors above leave serious questions about the sustainability of the current modest levels of growth.