Potential Growth: A Global Database

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Potential growth—the rate of expansion an economy can sustain at full capacity and employment—is a
critical driver of development progress. It is also a major input in the formulation of fiscal and monetary
policies over the business cycle. This paper introduces the most comprehensive database to date, covering
the nine most commonly used measures of potential growth for up to 173 countries over 1981-2021. Based
on this database, the paper presents three findings. First, all measures of global potential growth show a
steady and widespread decline over the past decade, with all the fundamental drivers of growth losing
momentum over time. In 2011-21, potential growth was below its 2000-10 average in nearly all advanced
economies and roughly 60 percent of emerging market and developing economies. Second, adverse
events, such as the global financial crisis and the COVID-19 pandemic, contributed to the decline. At the
country-level also, national recessions lowered potential growth even five years after their onset. Third, the
persistent impact of recessions on potential growth operated through weaker growth of investment,
employment, and productivity.

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