The growth forecast puzzle

• Author: M. Ayhan Kose - Franziska Ohnsorge - Naotaka Sugawara
• Position: M. AYHAN KOSE is director of the World Bank's Development Prospects Group - FRANZISKA OHNSORGE is manager - NAOTAKA SUGAWARA is senior economist
• Pages: 52-55

52 FINANCE & DEVELOPMENT | March 2019

O

ver the past decade, the implications of

recent technological innovations for future

growth have become a subject of lively

debate. Some claim that, in the coming

decades, the global economy will enjoy a surge in

economic growth driven by improvements in pro-

ductivity thanks to new technologies (Brynjolfsson

and McAfee 2014; Mokyr 2018). Others caution that

future growth could stall, or even decline, because new

technologies will likely have a diminishing marginal

impact on productivity and structural challenges

associated with aging and sluggish investment growth

will cast a pall on prospects (Gordon 2016).

It is difficult, if not impossible, to underta ke a

credible quantitative analy sis of the aggregate impact

of new technologies on growth prospects. However,

long-term growth forecasts cou ld provide a small

window into this debate. ese forecasts could be

expected to improve over time as new technologies,

such as machine lear ning, cloud computing, robot-

ics, and smartphones, spread. But is t his borne out

by the data? In our study, we examine how long-

range forecasts h ave evolved during a period of rapid

technological change in order to gauge what this

might mean for future grow th (Kose, Ohnsorge,

and Sugaw ara, forthcom ing).

THE GROWTH FORECAST

PUZZLE

PHOTO: ISTOCK/MONSITJ

With vast technological change afoot, why are long-term growth forecasts

becoming more pessimistic?

M. Ayhan Kose, Franziska Ohnsorge, and Naotaka Sugawara