Sources: Holston, Laubach and Williams (2017); OECD; RBA  Slower growth in potential output can stem from lower productivity growth or population ageing, or a combination of the two. Productivity growth has slowed over the past few decades, in Australia and elsewhere (Graph 5).
﻿[ 6] Candidate explanations for this include reduced innovation, increased regulation, slower adoption of innovation, reduced business dynamism and reduced competition. ﻿[ 7] The trend has been obscured lately by the effects of the pandemic. As best as we can tell, though, this slow productivity performance has continued below the surface.