Lower Potential Growth in the Euro Area After the Crisis

Abstract

The global financial crisis in 2008 and subsequent euro area sovereign debt crisis have had a substantial adverse impact on economic growth. In Norway their direct effect took the form of reduced demand for Norwegian exports. We use a growth accounting framework to determine the factors that drove growth ahead of and during the crisis and ascertain the growth potential in the coming years. We find that for the period 2013–2020, potential growth is approximately half of what it was before the crisis.