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Potential Growth Prospects: Risks, Rewards, and Policies

Author

Listed:
  • Sinem Kilic Celik

    (IMF)

  • M. Ayhan Kose

    (Prospects Group, World Bank; Brookings Institution; CEPR; CAMA)

  • Franziska Ohnsorge

    (Prospects Group, World Bank; CEPR; CAMA)

Abstract

Potential output growth around the world slowed over the past two decades. This slowdown is expected to continue in the remainder of the 2020s: global potential growth is projected to average 2.2 percent per year in 2022-30, 0.4 percentage point below its 2011-21 average. Emerging market and developing economies (EMDEs) will face an even steeper slowdown, of about 1.0 percentage point to 4.0 percent per year on average during 2022-30. The slowdown will be widespread, affecting most EMDEs and countries accounting for 70 percent of global GDP. Global potential growth over the remainder of this decade could be even slower than projected in the baseline scenario—by another 0.2-0.9 percentage point a year—if investment growth, improvements in health and education outcomes, or developments in labor markets disappoint, or if adverse events materialize. A menu of policy options is available to help reverse the trend of weakening economic growth, including policies to enhance physical and human capital accumulation; to encourage labor force participation by women and older adults; to improve the efficiency of public spending; and to mitigate and adapt to climate change, including infrastructure investment to facilitate the green transition.

Suggested Citation

  • Sinem Kilic Celik & M. Ayhan Kose & Franziska Ohnsorge, 2023. "Potential Growth Prospects: Risks, Rewards, and Policies," Koç University-TUSIAD Economic Research Forum Working Papers 2303, Koc University-TUSIAD Economic Research Forum.
    • Handle: RePEc:koc:wpaper:2303
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    Cited by:

    1. is not listed on IDEAS
    2. Ohnsorge,Franziska Lieselotte & Quaglietti,Lucia, 2023. "Trade as an Engine of Growth : Sputtering but Fixable," Policy Research Working Paper Series 10356, The World Bank.
    3. Festus Victor Bekun & Ilhan Ozturk, 2025. "Economic globalization and ecological impact in emerging economies in the post‐COP21 agreement: A panel econometrics approach," Natural Resources Forum, Blackwell Publishing, vol. 49(1), pages 637-655, February.
    4. World Bank, "undated". "South Asia Development Update, October 2024: Women, Jobs, and Growth," World Bank Publications - Reports 42002, The World Bank Group.

    More about this item

    Keywords

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    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General

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