We think that world GDP growth will average around 3.0% over the next twenty years, compared to around 3.5% over the past two decades. Productivity growth is likely to rebound in advanced economies, led by the US, but this will be offset by a steady slowdown in population growth. There will, however, be big differences between countries. Some emerging economies will continue to converge with advanced economies, but we suspect that many will not. Inflation will probably remain subdued due to continued political support for independent, inflation-targeting central banks, and the rebound in productivity growth should push up real interest rates.
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