Introduction: Understanding productivity 1 Productivity is more than an abstract economic statistic. For businesses, it determines profitability and market viability. For economies, it is a fundamental measure of economic health and the foundation of long-term growth and improvements in living standards. Differences in productivity are what explains why countries with similar resource endowments can exhibit vastly different economic outcomes. For example, more than half of global disparities in GDP (gross domestic product) per capita can be attributed to countries’ differing levels of productivity.1 Ultimately, productivity growth reflects the ability to produce more with less, owing to new ideas, innovation and the capacity of human capital to harness technological progress.2 Without productivity improvements, economic growth becomes reliant on expanding labour and capital inputs – an approach that is unsustainable in a world constrained by environmental limits, a dwindling workforce and tightening financial buffers. The remainder of this introduction looks at global productivity patterns, outlining the sluggish dynamics of recent decades and considering the global trends that will shape future productivity. The rest of this paper will then build on this analysis by conceptualizing four scenarios for the future of productivity in 2030 (see Chapter 2), assessing industry exposure to changing productivity dynamics (see Chapter 3) and identifying a series of strategic recommendations for businesses and governments (see Chapter 4). Historically, productivity has followed a pattern of booms and slowdowns. For example, in the early- and mid-20th century, industrialization, mass electrification and rapid infrastructure development fuelled a surge in productivity. Similarly, the rapid development of new information technologies and digital infrastructure in the late 20th century spurred significant productivity gains, creating new markets and reshaping industries from retail to finance. These waves of innovation and increasing productivity were key drivers of GDP growth, rising incomes and improved living standards over the last century. More recently, however, despite the acceleration of technological development, productivity growth has remained sluggish in many economies – what is commonly referred to as the “productivity paradox”. New technologies have delivered significant productivity gains to frontier firms, but the wider productivity impact has been meagre.3 In fact, based on Accenture analysis, nearly 40% of large companies recorded negative productivity growth in recent years.4Country-level trends The International Monetary Fund (IMF) estimates that more than half of the deceleration in global economic growth since the 2008-2009 global financial crisis (GFC) can be attributed to a slowdown in productivity.5 Globally, growth in total factor productivity (TFP) – a measure of the effectiveness with which economic inputs are combined, reflecting drivers such as efficiency, innovation and organizational change – has slowed from an annual 1.6% in the early 2000s to just 0.6% for the post- GFC period (see Figure 1). In advanced economies, TFP growth halved to 0.4% over this period, while the slowdown has been steeper for emerging-market and middle- and low-income economies, where average TFP growth dropped from above 2% in the early 2000s to 0.6% after 2008, settling near 0% in low-income economies since 2020.6Reviving productivity growth requires tackling structural barriers such as access to capital and talent, infrastructure gaps and diffusion of innovation. 1.1 The productivity slowdown More than half of the deceleration in global economic growth since the 2008-2009 global financial crisis can be attributed to a slowdown in productivity. Global Economic Futures: Productivity in 2030 6

Global Economic Futures Productivity in 2030 2025