Sustained Global Economic Growth at Risk

In its newly-released report on the key characteristics of and growth prospects for the world economy, Global Economic Outlook 2018-2022: The Productivity Imperative, A.T. Kearney's Global Business Policy Council throws the spotlight on four significant risks that, if left unaddressed, will prevent sustained levels of economic growth in the medium and long term. The most significant risk is anemic productivity growth, projected in the coming years to be less than half the rate it was in the years immediately prior to the global financial crisis. To read the full report, visit www.atkearney.com/GEO2018.

According to the report, relatively robust economic expansion is expected in both the short and medium term—with global economic growth accelerating from 2.9 percent in 2017 to 3.1 percent this year, and averaging 2.9 percent growth annually through 2022. Emerging markets in Asia will continue to be the primary driver of growth in the world economy. Stronger performance in large developed markets, coupled with increasing growth levels in commodity-exporting regions in Eurasia, sub-Saharan Africa, and Latin America, also contribute to the bullish outlook. As a result, the world economy is on a synchronous upswing for the first time since the global financial crisis.

But four significant risks cast a shadow over the positive short-term outlook. Any of one these risks could derail the synchronous expansion. Taken together, they call into question how sustainable short-term growth will be in the medium and long term. The risks identified by the Council are the "all-too-visible hand" of political risk and regulatory uncertainty; the "islandization" of the global economy as barriers on trade, immigration, capital, and other cross-border flows intensify; a growing debt overhang that puts several major economies, especially China, on increasingly shaky ground; and persistent weak productivity growth.

The last of these risks—weak productivity growth—is especially important because the challenge is cyclical and structural, affects all major economies, and defies easy solution. Solving the mystery of missing productivity, the report argues, is crucial to sustaining current levels of global economic growth.

The Council's analysis highlights six chief impediments to higher productivity growth: low levels of business investment, inadequate spending on infrastructure, labor force dynamics, reduced levels of competition and entrepreneurship, slower expansion of global value chains, and the uncertain effects of recent technological changes. Each of these drags on productivity growth has corresponding solutions that government and business leaders can implement to boost long-term global productivity, economic performance, and well-being.

To read the full report, visit www.atkearney.com/GEO2018

About the Global Business Policy Council
The Global Business Policy Council is a specialized foresight and strategic analysis unit within A.T. Kearney. Since its first CEO Retreat in 1992, the Council has been a strategic service for the world's top executives, government officials, and business-minded thought leaders. Through exclusive global forums, public-facing thought leadership, and advisory services, the Council helps to decipher sweeping geopolitical, economic, social, and technological changes and their effects on the global business environment. The Council consistently ranks near the top of the University of Pennsylvania's list of best private sector think tanks, and currently holds the 4th spot globally.

To learn more about the Global Business Policy Council, visit www.atkearney.com/gbpc.

To learn more about A.T. Kearney, visit www.atkearney.com.

Contact: Jeffrey Gelman
[email protected]    
703.350.7840

SOURCE A.T. Kearney

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