Potential growth
In economics, potential growth is understood to be the long-term change in gross domestic product with a normal degree of utilization of production capacities . Hence, the potential growth represents the change in the production potential.
Differentiation from economic growth
The potential growth is not identical with the real observable economic growth , since the latter also depends on the economic development. This means that economic fluctuations can be interpreted as fluctuations in the degree of utilization.
Nevertheless, with all the filter processes used to determine the production potential, it can be stated that an increase in economic growth is usually also associated with a (smaller) increase in potential growth. This is particularly indicated by representatives of the Keynesian or endogenous growth theory .
Measurement
Main article: Production potential
The measurement of the production potential and thus also the potential growth is extremely difficult, since neither of the two variables can be observed directly. Often one avoids measuring the long-term average or trend of actual economic growth. However, this does not adequately determine the output gap. Further possibilities are the questioning of companies about their utilization of real capital . However, this is only possible for the manufacturing industry.