NEW YORK, May 26, 2016 /PRNewswire/ -- Global productivity growth continues to weaken, creating another headwind for businesses already facing slowing demand for goods and services, according to the latest release of annual productivity growth rates for 123 countries by The Conference Board.
Global productivity growth, which has been trending lower over the last decade, will continue to soften throughout 2016. The 2016 Productivity Brief, based on data from The Conference Board Total Economy Database™, projects global productivity to grow just 1.5 percent in 2016, compared to 1.2 percent in 2015 and 1.9 percent in 2014.
Labor productivity growth — defined as additional output per unit of labor — relates output growth to changes in employment. Among mature economies, output and employment growth are projected to slow down. Productivity growth is expected to moderate from 0.7 percent in 2015 to 0.6 percent in 2016. The U.S. is currently experiencing the slowest productivity growth since 1982 (0.7 percent in 2015, and zero growth projected in 2016), exacerbated by weak investment, making it harder to accommodate increased labor cost pressures or free up resources for much needed innovations in the New Digital Economy.
European economies have shown slightly better productivity performance (currently at 0.9 percent, up from 0.5 percent in 2014) compared to the U.S., as their modest recovery combines with even slower recovery in employment growth. However, several major economies, including France, Germany, Italy, Spain and the UK, are projected to experience much weaker productivity growth in 2016 as labor markets gain traction with accompanying output growth, reducing the opportunity to afford wage increases.
The slowdown in China's economy is almost entirely reflected in weaker productivity growth, as employment growth is already quite sluggish in a highly overinvested economy. However, modest productivity gains are possible in 2016, as companies slow additional hiring even further. The Conference Board projects China productivity growth to be 3.6 percent in 2016, compared to 3.3 percent in 2015 and 5.2 percent in 2014.
Despite weakness among mature economies, the global productivity slowdown is driven primarily by emerging markets, as weaker output growth, especially in economies highly dependent on lower-priced natural resources and commodities, has not translated into reduced employment growth. Any improvements in productivity growth will come primarily from resource-rich economies, such as Russia, Brazil, the Middle East and sub-Saharan Africa, if prices of natural resources and commodities continue to hold at current levels. Productivity growth among emerging markets and developing economies was 1.7 percent in 2015, down from 3.0 percent in 2014, but is projected to be 2.2 percent in 2016.
Causes of Productivity Slowdown
There are several factors driving the productivity slowdown. These include the possible impact of recent recessions which mature economies are still struggling to recover from, and may also be the cause of long-term stagnation. Other causes include the exhaustion of productivity growth trends in emerging markets, formerly a major driver of overall global productivity growth, and regulatory and other policy measures that inhibit growth, as explained in an earlier report by The Conference Board, Prioritizing Productivity (2015).
Another reason for the productivity slowdown is the poor translation of technology and innovation into economic growth over the last decade. The slowing of the pace at which innovations spread throughout the economy may also be a key factor, which was highlighted in a recent report, Navigating the Digital Economy, which was published by The Conference Board on May 17.
For complete details on the Productivity Brief 2016:
For more information on Prioritizing Productivity (2015):
For more information on Navigating the Digital Economy (2016):
For more information on the Global Economic Outlook 2016:
For information on Global Economic Outlook 2016: Sub-Saharan Africa: Climbing a Steeper Hill?
About The Conference Board
The Conference Board is a global, independent business membership and research association working in the public interest. Our mission is unique: To provide the world's leading organizations with the practical knowledge they need to improve their performance and better serve society. The Conference Board is a non-advocacy, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. www.conference-board.org
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SOURCE The Conference Board