ECB Economic Bulletin: Recent Shocks’ Impact on Medium-Term Productivity Growth Is Uncertain

19 March 2024

By Aurėja Bobelytė – VILNIUS (Econostream) – The impact of the pandemic and the energy crisis on medium-term productivity growth is uncertain, according to an article published by the European Central Bank on Tuesday.

‘The generous and swift policy responses at the national and European levels to the pandemic and the related lockdown measures helped to contain the size and duration of scarring effects on households and firms’, the ECB said.

According to the ECB, the energy price shock caused by the Russian invasion of Ukraine and the transition to a greener economy is affecting the production and investment decisions of companies, which is impacting their productivity.

‘The impact is expected to be negative over the short term but, given the need for production processes to adapt, green innovation might lift productivity prospects over the longer term’, the ECB noted.

According to the article, digitalisation processes in firms were found to foster productivity growth. However, ‘only a few firms – the ones closest to the technology frontier – have benefited the most from digitalisation’, the ECB said.

‘The green transition may still boost productivity growth, but it will take time’, the authors noted.