Can it last? The long awaited pickup in Eurozone productivity
17.05.2018Company: Amcham
As the Eurozone recovery matures, a more permanent pickup is not yet assured. In this major report, we note that major structural reforms have yet to take place and it could be some time yet before the Eurozone breaks out of its structural productivity rut
As the Eurozone recovery matures, a focus on medium-term growth is returning. With the population ageing, productivity gains seem to be the key to improved growth potential. Even though the short-term outlook for productivity is improving, a more permanent pickup is not yet assured, as long as lagging companies fail to catch up. In that regard, structural reforms have yet to produce noticeable effects in key sectors. It could, therefore, take some time before the Eurozone breaks out of its structural productivity rut even though the trough seems to have passed. From now to 2025, we expect 1.3% productivity growth annually. For the ECB, this is a classic Catch-22. It is damned if it continues to keep easy financing conditions in place for keeping unproductive firms alive, and damned if it doesn’t as it kills off catch-up opportunities for laggards.
In this report, we note that:
- Current productivity gains might be short-lived Structural improvements seem harder, despite technological progress
- Post-crisis financing effects have had an ambivalent impact
- Structural reforms may boost productivity but have slowed
- The ECB is caught in a Catch-22
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Can it last? The long awaited pickup in Eurozone productivity
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Tags: Economics | Finance | Business Development |
