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Is economic growth over?

Why state, citizen and business may be facing a new normal

Cover Is economic growth over?

© Berlin-Institut

Over recent decades, economic growth has declined dramatically in all industrialised countries. This is the result of structural changes in developed societies. First, population growth is slowing. Second, innovation potential and productivity are only increasing slowly, despite globalisation and digitalisation. Third, inequality is increasing and limiting the consumption potential of lower income groups. Finally, environmental damage is exerting a decelerating effect on economic development. Classic cyclical economic policy is ineffective in the case of a structurally-caused reduction in growth. So far, growth has been vital for states, businesses and society. If economic growth remains low in the context of secular stagnation, developed countries will need to carry out fundamental macroeconomic transformations.

The Berlin Institute would like to thank the Daimler und Benz Stiftung for supporting this research project.

Category: Demographic change
published: 4th October 2017
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Selected Figures

annual GDP growth rates in Germany since 1951
During the economic miracle, Germany enjoyed growth rates close to those seen currently in emerging countries. In time however – looking at ten-year average figures – growth rates have steadily declined (red line). The current decade is necessarily incomplete and therefore of little significance (dashed line). © Berlin-Institut
ten year average GDP growth rates in different countries
All industrial countries are exhibiting the same trend: high economic growth is a thing of the past. Nevertheless, there are considerable differences across countries. © Berlin-Institut
government dept-to-GDP ratio in differnt countries
Countries have typically taken on debt during times of economic crisis as a means to stimulate the economy with investment programs. Once the economy has recovered, the debt is repaid. However, since the financial crisis, debt obligations in many countries have risen much faster than economic output. This trend has been evident in Japan for more than two decades. © Berlin-Institut

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© Berlin-Institut

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