Economic growth means that people and businesses are producing more goods and services than before. It’s a key measure of a healthy economy and something that public- and private-sector leaders, as well as individuals, are keenly interested in. If growth is stalled or shrinking, it can lead to higher unemployment, reduced business investments and lower consumer spending—and everyone feels worse off.
There are many reasons for economic growth, but the main one is increased productivity. When an economy invests in new production technologies, it can boost output per worker. For example, in the 15th century, goldsmith Johannes Gutenberg combined his idea of movable letters with the machinery he used to press wine in his hometown and developed the printing press, which allowed him to produce more books than ever before in a single day. This new technology boosted book production and brought books to the masses, which led to further economic growth.
Several factors can influence economic growth, including the accumulation of physical capital and investments in human capital, which is the development of skills and abilities that increase a person’s productivity. Another factor is a country’s institutions, which include laws and regulations as well as customs and practices. These can impact economic growth by influencing the incentives that encourage or discourage productive activity.
In the short term, global growth is projected to pick up slightly as a result of a stabilization in oil prices and the easing of inflationary pressures. However, longer-term prospects remain cloudy amid rising trade tensions and uncertainty about future policy direction.