Productivity growth in most advanced economies has been much weaker than that in the US since the pandemic. This partly reflects the relative weakness of demand, coupled with a degree of labour hoarding which has led workers to be underutilised. Persistently weak business investment outside the US has limited capital deepening. And it’s possible that the US has already benefitted more from AI. But we expect this divergence to narrow after this year as productivity growth picks up in most DMs.
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