In an interview, Ayhan Kose said the global economy has shown unexpected resilience in the face of a series of shocks, with the U.S. recording another year of surprisingly strong growth.
The deputy chief economist said that record raises the possibility that the rate of potential growth—or the pace at which output can grow using all available resources but without stoking inflation—may be higher than currently estimated.
“We need to increasingly think whether the economy’s potential growth has been increasing,” Kose said.
The World Bank estimates that the U.S. economy expanded by 2.1% in 2025, which would bring its average growth rate since 2022 to 2.6% compared with 2.2% in the decade through 2020. That excludes the first year of the decade when the economy grew by 6.2% as it rebounded from Covid-related shutdowns.
The potential growth rate can be thought of as the economy’s speed limit. It matters to policymakers because it provides an indication of whether inflationary pressures are likely to build, and how tax revenues are likely to perform. At present, the Congressional Budget Office estimates potential growth at 1.8%.
A higher rate would indicate the economy can grow more rapidly without the Federal Reserve having to raise its key interest rate, and suggests that budget deficits are likely to be smaller than forecast.
Changes in the potential rate of growth are usually linked to changes in population or productivity. With more workers, an economy can grow more rapidly without overheating, or the same number of workers can become more productive thanks to new technology.
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“Given the investment boom, given year after year of supportive fiscal policy, and of course if you look at productivity numbers improving, you can make a case that there is a level change in potential growth, maybe it’s now 2.2%, maybe it’s 2.4%,” Kose said.
The World Bank expects the U.S. economy to grow a little faster this year, by 2.2%. But others take a more optimistic view. BNP Paribas expects the world’s largest economy to expand by 2.9%.
“We see a lot of momentum in the U.S. economy,” said Isabelle Mateos y Lago, the French bank’s chief economist.
For now, the bank views the pickup in productivity in 2025 as likely temporary and down to subdued hiring in a time of great uncertainty. But it may not be, and instead a sign of things to come around the world.
“It is possible this step-increase in productivity is sustained and not limited to the U.S.,” Mateos y Lago said.
Indeed, the International Monetary Fund estimates the application of new technologies including AI could boost global growth by between 0.1 and 0.8 percentage points annually over the medium term.
IMF Managing Director Kristalina Georgieva said the top end of that range is “big.”
“It would lift global growth above prepandemic levels if it happens,” she said.
A faster-growing, more resilient U.S. would be a boost for the global economy, increasing demand for goods and services made elsewhere even as higher tariff rates suppress it.
“That has huge implications for the global economy,” said Kose. “You basically have this largest economy doing very well despite the fact that it has been buffeted by a number of shocks. That also helps the global economy.”
The global economy needs all the help it can get. In contrast to the performance of the U.S., India and a small number of other countries, growth has been weaker than it was before the Covid-19 pandemic struck, and particularly in poorer parts of the planet.
By the end of last year, per capita incomes in almost all advanced economies exceeded the levels recorded in 2019. However, the World Bank estimates that incomes in one out of four developing countries had yet to recover to their prepandemic levels.
“There is this great recovery, but there is this great divergence as well,” Kose said.
A big concern for the World Bank is that those slower-growing countries have rising populations of young people that will need a job over the coming decade.
“This is a very serious threat to the stability of those economies,” he said.
Write to Paul Hannon at paul.hannon@wsj.com