The January 2018 edition of Global Economic Prospects (GEP) is a publication by the World Bank. It points out that, for the first time since the global financial crisis, all major regions of the world are experiencing an uptick in economic growth. The current, broad-based growth acceleration is a welcome trend and could be self-reinforcing.
On the other hand, stepping outside the frame of short-term forecasting, the GEP observes that growth in investment and in total factor productivity (TFP) has been declining over the past five years. Thanks to demographic trends, labor force growth has also been slowing in many parts of the world. This means that potential output (the amount the economy can produce if labor and capital were fully employed) would grow at a subdued pace in the future. The current demand-led recovery is likely to run up against supply constraints. The decline in TFP growth is particularly troubling since this has been a key source of rising living standards in many countries in the past.