The OECD’s latest growth outlook shows that global economic expansion remains on track. However, rising global interest rates, increasing debt sustainability risks and geopolitical tensions have created downside risks to the outlook.
The most common measure of economic growth is gross domestic product (GDP)—the market value of all the products and services produced within a country in a given period. It’s calculated by adding up the amount spent by consumers, businesses and government (including net exports).
There are many ways to boost economic growth, but two of the most important factors in raising per-capita GDP and incomes are adding physical capital goods—such as machinery or tools—to an economy and improving productivity—the ability to produce output over a certain length of time. Both of these can be driven by people saving money, investing in the economy, starting or expanding a business, or by a country using its fiscal policy to encourage this behavior.
In addition to boosting productivity, economic growth can also result from a country finding new resources or developing its existing ones more efficiently. This can be the case when a new type of mineral is discovered or when a company develops a new way to mine an old one.
These improvements in productivity allow workers to enjoy a higher material standard of living for the same number of hours they spend working or to achieve the same level of material well-being with fewer hours of work. However, economic growth must be sustained to raise the standard of living for all. That’s why the OECD and its members continue to work with national governments and nongovernmental economic research organizations to improve their policies and processes for encouraging long-term sustainable growth.
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