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
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
