Daily Management Review

McKinsey: Productivity will grow in the US and Europe


02/21/2018


The era of inert productivity growth may be coming to an end in the US and Europe. This conclusion is contained in the report of the research division of the consulting company McKinsey & Co., writes Bloomberg.



According to experts, productivity can grow by more than 2% per year over the next decade, compared to about 0.5% in recent years.

Digitalization will become the main driving force for the projected recovery. McKinsey believes that only 12% of the digital potential is involved in Europe as a whole, and this figure is 18% in the USA.

Improvements can be achieved in various ways. One of them is the increase in retail sales on the Internet. Now they make about 10% of transactions. Analysts also expect the commercial development of highly or fully autonomous vehicles, which may account for up to 15% of sales in the industry by 2030. Other options for improving efficiency include an increase in the number of Internet banking transactions and a wider use of smart counters by utilities.

The report also highlights the importance of demand for determining productivity growth rates. Faced with weak demand and surplus capacity after the financial crisis, companies have reduced planned purchases of equipment that increases efficiency. They were also forced to sell low-premium products to encourage cautious consumers to buy them.

Now many of these constraints are weakening as the world economy recovers, which contributes to the growth of the hourly productivity that McKinsey expects.

However, the big uncertainty is whether digitalization will aggravate income inequality and other long-term trends that constrain growth, says Jan Mishke, partner of the McKinsey Global Institute in Zurich. In this regard, the importance of economic measures, such as the development of workers' skills in order to counteract this phenomenon, is growing.

According to Mishke, "retraining and maintaining demand will be key components" that will help ensure faster growth in productivity.

In January, the World Bank raised the forecast for global economic growth for 2018. However, bank experts warned that demographic factors, lack of investment, slower productivity growth and tightening of monetary policy limit further economic recovery.

The problem facing the world is that after several years of recovery from the financial crisis of 2008, most developed and developing countries closed the gap between actual and potential economic growth.

The World Bank warned that the acceleration of global economic growth will be temporary if governments do not undertake structural reforms to increase long-term growth potential.

source: bloomberg.com
 






Science & Technology

Chinese Study Claims Heart Diseases Can Be Reduced By Having An Egg A Day

Asteroid mining: Reality or fiction?

3D Printing Used For Life Saving Kidney Transplant In Two Year Old At U.K. NHS

California to require solar panels for new homes by 2020

Blockchain Enables De Beers To Track Diamond From The Miner To The Retailer

Microsoft releases Windows 10’s April 2018 Update

DNA Sequencing Project Proposed For All Complex Life Forms On Earth By An Int’l Team

Facebook may start production of its own microprocessors

Long-Term Alcohol Monitoring Could Be Possible With A New Injectable Chip Developed By U.S. Researchers

Sweden Now Has The First Electrified Road In The World

World Politics

World & Politics

The British government is trying to unblock money to pay off the national debt

Ministerial Visit From India To North Korea Aimed At Strengthening Ties

What countries are the biggest losers of Trump’s Iran decision?

World's Oldest Elected Prime Minister Is Malaysia’s 92 Year Old Mahathir Mohamad

Why Is U.S. Pulling Out Of The Iran Deal A Big Deal For The World

Merkel, Macron, May call on Iran to adhere to the nuclear deal

Arab Region Driven In ‘Wrong Direction’ In Last 10 Years, Say Arab Your: Survey

German doctors demand a tax on sugar