Ecological transition will affect productivity in the short and medium term, says the ECB

The ecological transition will affect productivity growth in the short and medium term, due to the adjustments that companies will have to make to adapt to the reduction in emissions, but will boost it over a longer period of time, according to the European Central Bank (ECB).

This Tuesday, the organization published a new article in its economic bulletin, in which its economists study the impact on productivity growth of the pandemicdigitalization and the ecological transition.

In the case of the latter, he explains that it will boost the growth of the productivity “but it will take time”, since in the short and medium term companies will have to adjust to the change in prices due to carbon taxes or geopolitical tensions, as well as new limits and regulations.

However, stricter environmental policies will unleash a new wave of green innovation and new technologies that will increase long-term productivity growth.

Regarding the coronavirus pandemic, economists at the ECB They consider that its effect on long-term productivity is still uncertain, although it could have a positive effect, with the emergence of teleworking or the rise of electronic commerce.

However, it could also have negative effects, especially on the workforce, since the pandemic would have reduced skills and human capital, in addition to affecting the education of future workers.

In this area, the report highlights that the policies implemented to mitigate the effects of the pandemic they did not significantly distort the reallocation of resources between companies.

Furthermore, monetary policy also played a key role in moderating the adverse effects, at a time when there was a sharp decline in productivity within the companies.

In the case of digitalization, the report has highlighted that the pandemic promoted it, but that it had an uneven effect on companies depending on the sector.