Unfortunately, since the start of the crisis, euro area total factor productivity growth has remained subdued, falling behind productivity growth in the U.S., where it rebounded after reaching a trough in 2009.
To increase potential output growth against the background of a decreasing working age population, the euro area has to rely on more investment and capital deepening but, crucially, more so on total factor productivity growth which needs to resume growing at least at an annual growth pace around 1%, the rate prevailing at the beginning of the previous decade.