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Increased liquidity boosted productivity growth in 2021

The increased liquidity that was present in the economy in 2021 continues to have mixed effects. On the one hand, the complex inflationary outlook that it has caused, but on the other, the greater boost in activity. A reflection of that is the increase in productivity last year.

According to the National Productivity Commission (CNP) in 2021 this variable had an increase between 7.4% and 8.7% for the entire economy and between 8.1% and 9.5% for the economy without mining. This recovery contrasts with the falls in 2020: between -0.1% and -2.1% for the aggregate economy and between -1.9% and -4.0% for the non-mining economy.

“The figures for 2021 are strongly driven by an overheated economy, which registers an aggregate GDP growth of 11.8% and 13.1% for the non-mining economy,” the entity warned.

In this sense, the report shows that it should be considered “that the GDP would be strongly impacted by the enormous fiscal impulse to support families and companies, by the greater liquidity and by the effects of pension fund withdrawals.”

The entity counselor Verónica Mies He detailed that “the dynamics of employment is significantly influenced by the pandemic (quarantines and other restrictions) affecting employment measurements and the adjustments that use it to measure capital utilization. For this reason, sensitivity exercises are carried out for TFP adjusting employment for different factors ”.

For example, he says, “workers whose contracts were suspended under the Employment Protection Law are excluded, the workforce is truncated to pre-pandemic levels, and the employment rate is used as an adjustment to the use of capital.”

When comparing the productivity measurement, and averaging the different proposed adjustments, it is found that for the 2020-2021 biennium the TFP of the aggregate economy would have increased by 3.8% annually, and the TFP of the non-mining economy by 3.5% annual.



March 10, 2020 Construction Workers, employment, work.  Photo: Andres Perez March 10, 2020 Construction Workers, employment, work.


© Andres Perez
March 10, 2020 Construction Workers, employment, work. Photo: Andres Perez March 10, 2020 Construction Workers, employment, work.

“It is expected that once the pandemic is over, the evolution of productivity can be estimated in a medium-term perspective to adequately isolate the effects of the economic cycle,” said the economist.

For its part, the executive secretary of the CNP, Rodrigo Krell, He highlighted that a positive element of this period of pandemic “has been the massive irruption of the use of information technologies. Although it is clear that at the end of this period part of this use will be rolled back while presence increases, it is also clear that its benefits may motivate many companies to implement mixed systems in the future. These benefits, however, are also accompanied by challenges for public policy, such as the compatibility between work and family life ”, he pointed out.

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