Currently, growth is also held back by financial deleveraging, subdued demand, and low inflation (which raises real interest rates). Besides these short-term factors, future growth prospects are weakened by the long-term decline in productivity growth that is affecting all developed countries. Economists have pointed to several factors to explain this slowdown.
According to one view, growth in advanced economies may be hampered by inadequate aggregate demand, driven by demographic trends, growing inequality and raising government debt, resulting in a “secular” decline in interest rates.