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Graph of the week: The potential GDP gains of structural reforms in Europe

The potential impact of structural reforms on economic growth was calculated in a recent study by the Commission: ‘The growth impact of structural reforms’pdf Choose translations of the previous link , Quarterly report on the euro area, Vol. 12, Issue 4.

The gains in output and employment if countries would narrow the gap relative to best performance could potentially be large.

Source: The Role of Structural Reform for Adjustment and Growth

 

Potential GDP gains

GDP could be raised by 1.5 % to 4 % after five years and between 2.5 % and 6.5 % after ten years. In the case of Greece the effects could be even larger (6 % and 14 % respectively).

Some of these effects may actually be already in the pipeline, as the structural indicators of labour and product markets used were mainly based on 2012 data, and recent reforms have partially closed these gaps. Simultaneous reforms in all countries would raise the GDP of each individual country more than reforms undertaken alone, as higher demand effects help to support growth in other MS.

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