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Assessing Global Potential Output Growth

Author

Listed:
  • Patrick Alexander
  • Michael Francis
  • Christopher Hajzler
  • Kristina Hess
  • Patrick Kirby
  • Louis Poirier
  • Sri Thanabalasingam

Abstract

This note estimates potential output growth for the global economy through 2019. While there is considerable uncertainty surrounding our estimates, overall we expect global potential output growth to rise modestly, from 3.1 per cent in 2016 to 3.4 per cent in 2019. This gradual increase is expected to be broad-based, reflecting growth-enhancing reforms in oil-importing emerging-market economies (excluding China) and in the euro area and the diminishing drag on investment in commodity-producing regions stemming from the 2014–15 decline in commodity prices. Potential output growth in the United States is expected to rise modestly through 2019 driven by a small recovery in trend total factor productivity growth. China is the only major economy where potential output growth is expected to slow, albeit moderately, as it gradually transitions to a more sustainable growth path featuring slower investment growth.

Suggested Citation

  • Patrick Alexander & Michael Francis & Christopher Hajzler & Kristina Hess & Patrick Kirby & Louis Poirier & Sri Thanabalasingam, 2017. "Assessing Global Potential Output Growth," Staff Analytical Notes 17-3, Bank of Canada.
    • Handle: RePEc:bca:bocsan:17-3
    DOI: 10.34989/san-2017-3
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    References listed on IDEAS

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    1. Jeannine Bailliu & Mark Kruger & Argyn Toktamyssov & Wheaton Welbourn, 2019. "How fast can China grow? The Middle Kingdom's prospects to 2030," Pacific Economic Review, Wiley Blackwell, vol. 24(2), pages 373-399, May.
    2. John G. Fernald & J. Christina Wang, 2016. "Why Has the Cyclicality of Productivity Changed? What Does It Mean?," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 465-496, October.
    3. Jeannine Bailliu & Christopher Hajzler, 2016. "Structural Reforms and Economic Growth in Emerging-Market Economies," Bank of Canada Review, Bank of Canada, vol. 2016(Autumn), pages 47-60.
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    Cited by:

    1. Dany Brouillette & Katerina Gribbin & Justin-Damien Guénette & James Ketcheson & Olena Kostyshyna & Jonathan Lachaine & Colin Scarffe, 2017. "A Canada-US Comparison of Labour Market Conditions," Staff Analytical Notes 17-4, Bank of Canada.

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    Keywords

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    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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