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New Treasury Paper On The Productivity Slowdown

The Treasury has published a paper today on the global
productivity slowdown and how it is playing out in New
Zealand: The
productivity slowdown: implications for the Treasury’s
forecasts and projections

The world has been
experiencing a productivity slowdown, from which New Zealand
has not been exempt. COVID-19 temporarily boosted labour
productivity, but more recently, productivity has retreated.
The overall trend since 2007 has been one of slow
productivity growth.

The paper finds that a range of
factors are likely to play a role in the productivity
slowdown in New Zealand and across the world. These include
lower productivity benefits from innovation, weak investment
relative to employment growth, and a slowdown in
international trade and connections.

Based on an
analysis of current trends in productivity drivers, the
Treasury’s view is that productivity growth is most likely
to remain slow over the coming years. This supports downward
revisions to productivity forecasts in recent Treasury
forecast publications. The Treasury will also consider its
long-term productivity assumption in the next Long-Term
Fiscal Statement to be released in late 2025.

Treasury’s Chief Economic Advisor Dominick Stephens
commented: “The productivity slowdown was a key factor
behind the downward economic revisions that the Treasury
provided with the 27 March Budget Policy Statement. This
matters because sustainable improvements in our living
standards depend upon productivity. While not the topic of
today’s paper, the Treasury continues to look for
opportunities to boost productivity growth in its advice to

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