Global Productivity Growth Post-Covid – Down But By No Means Out

“You can see the computer age everywhere but in the productivity statistics.”

Robert Solow (1987) Emeritus Institute Professor of Economics at Massachusetts Institute of Technology (MIT)

 
According to the IMF – World Economic Outlook – October 2020, global GDP is expected to contract by 4.4% in 2020 and rebound by 5.2% in 2021. Along with the pandemic-related economic contraction of last year, global unemployment rates have soared as hundreds of millions of workers have lost their livelihoods:

The International Labor Organisation (ILO) Monitor: COVID-19 and the world of work. Sixth edition, published at the end of September, estimated that, compared to Q4 2019, during Q1, 5.4% of global working hours were lost – equivalent to 155mln full-time jobs. By Q2 this number had risen to 17.3% or 495mln jobs. Their Q3 estimate was a more modest 12.3% – still 345mln out of work. The impact this combined supply and demand shock has had on productivity, however, is more difficult to divine.

Total factor productivity (TFP) is a measure of productivity calculated by dividing economy-wide total production by the weighted average of inputs, such as labour and capital. It attempts to calibrate growth in real output (total product) in excess of the growth in inputs (factors of production).

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