Economic potential growth cannot be observed directly, meaning it cannot be measured directly either. Instead, it has to be estimated as precisely as possible. I don’t intend today to go into the methods used and the imponderables they entail. However, I think the connection between demographic trends and economic potential growth can be summed up with the following words.
Regardless of the uncertainty surrounding estimates of this kind over long periods of time, German potential growth is likely to be weaker in future than in past decades due, above all, to the demographics-driven decline in the number of hours worked.