The world's growth potential took a big hit after the 2007-2009
financial crisis and is likely to lag for years, implying that interest
rates should likely stay low for quite a while, the International
Monetary Fund said in a study.
Potential growth, which gauges how fast economies can grow over time without hitting inflationary speed bumps, already was slowing in richer economies before the financial crisis due to aging populations and a drop in technological innovation.
But declines in private investment and employment growth cut annual potential growth in these countries to 1.3 percent between 2008 and 2014, half a percentage point lower than before the crisis, according to the IMF study.
Potential growth, which gauges how fast economies can grow over time without hitting inflationary speed bumps, already was slowing in richer economies before the financial crisis due to aging populations and a drop in technological innovation.
But declines in private investment and employment growth cut annual potential growth in these countries to 1.3 percent between 2008 and 2014, half a percentage point lower than before the crisis, according to the IMF study.
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