China s Untapped Growth Potential

This new round of central bank activism reflects persistent concerns about economic growth. Despite a once unthinkable amount of monetary stimulus, global output remains well below potential, with the potential itself at risk of being suppressed.

Since Abenomics was launched, the deflation gap (the difference between actual and potential output) has dropped from roughly three percentage points to below 1.5. This implies that, while the first two arrows are helping to improve Japan s actual growth path, the third arrow has yet to do much for potential growth.

Notes 1 World output growth is measured as a weighted average of the output growth rates of 143 countries, based on 1993 exchange rates and prices (with some marginal adjustments).

Droughts impact substantially on the sector's output and result in negative growth rates.

As a result, growth of output is forecast to fall to 5 per cent.

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As a result of a deep and persistent deficiency in aggregate demand, the US economy has been operating far below its potential output level. Real GDP fell by 8 relative to its noninflationary potential in 2008 2009, and has remained about 8 below its previous growth path ever since.

Monetarists insist that economies experience inflation when money supply growth persistently exceeds output growth. That has not happened yet, so inflation has been postponed.

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SHANGHAI China s economic slowdown, from a nearly 10 annual output gain in 2007 to below 8 today, has fueled widespread speculation about the economy s growth potential. While it is impossible to predict China s future growth trajectory, understanding the economy s underlying trends is the best way to derive a meaningful estimate.

Like Brazil, India experienced a spurt of output growth after liberalizing its economy in the 1990 s indeed, until a few years ago, GDP growth was approaching Chinese style rates. This year, however, output is expected to rise by a relatively sluggish 5.9 .

With employment rising as Japan s economy moves toward realizing potential output, monetary stimulus will create inflationary pressures and public expenditure will yield sharply diminishing returns. At that point, significant growth can be achieved only by increasing the economy s real productive capacity.

Thus, the Japanese economy s potential annual growth rate slowed by roughly an additional two percentage points at the beginning of the 1990 s, as the post WWII development model lost its steam. It was largely a fluke that this growth slowdown coincided with an asset bubble collapse and a cyclical depression one that caused Japanese output to shrink by about 10 in a few short years, followed by only a slow recovery to the new, lower potential growth rate.

Continued progress in these areas will increase the region's resilience and growth potential.

The work on services prices and volumes is fundamental to achieving better measures of real services output and growth.

According to all evidence, the US economy s fall from its long run growth path has left America 7 poorer today (and into the indefinite future) than expected back in 2007. And this assumes that there is only a one time permanent downward shock, with no additional slowdown in the rate of potential output growth.

The dominant mode of thought within the Federal Reserve with which I agree appears to be that the information technology revolution is continuing, that the pace of growth of potential output in the US remains very fast, and that the output gap is thus relatively wide. This implies that interest rates may, in fact, need to stay low for a very considerable period.

Productivity growth is not about working longer it is about generating more output per unit of labor input. Any undercounting of output pales in comparison with the IT assisted undercounting of working hours.

We recognize the potential of South South cooperation in promoting economic growth and development.

This expansion in growth was mainly attributed to the recovery of agricultural output from the effects of the 2001 drought.

One of the papers, entitled Interdependence and growth in the Pacific region an international input output analysis , has been printed.

With high and volatile oil prices, businesses will focus their investments less on boosting productivity and more on maintaining flexible energy usage. At 40 a barrel, expect oil prices to slow the long run growth rate of the world's potential output by 0.1 per year.

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STEPS TAKEN BY SPACE AGENCIES FOR REDUCING THE GROWTH OR DAMAGE POTENTIAL OF SPACE DEBRIS

Ethiopia s development potential is closely tied to seasonal rains, so high rainfall variation, together with lack of infrastructure, has undermined growth and perpetuated poverty. A single drought can cut growth potential by 10 over an extended period.

The rise in real output was attributed to the heightened tourism activity supported by continued growth in the financial services sector.

So here, too, the logic points to a vicious circle Slower growth leads to artificial remedies and further erosion of long term growth potential.

Under the circumstance that is lack of more sustainable investment growth to boost economic growth potential, current fiscal policy driven growth will be unsustainable, Economist Barclays indicated in a research report.

The aim of the concept of potential as opposed to actual GDP is to take into account that, like an engine, an economy often operates below or above potential. In a demand driven recession, actual output falls below potential, which results in a rise in unemployment.

Interdependence and Growth in the Asia Pacific Region An International Input Output Analysis, by Takahiro Akita, Fu chen Lo and Yoichi Nakamura

World output cruising at 3 per cent growth in 1998 despite emerging market slowdown ... , press release issued in English in December 1997

While restructuring and reinvigorating domestic output are essential to sustained growth and long term development, external income and investment are needed to ensure rapid recovery and lay the foundation for sustained growth.

But such a sharp decline in potential growth typically implies a powerful brake, in the form of an external shock or major internal adjustments. Under normal circumstances, an economy s potential growth rate adjusts naturally and gradually, as structural change progresses.

As mentioned above, these flows not only sustain consumption in home countries but also support investment activities and lead to higher output growth.

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34. Disrupted social and economic conditions also lead to a potential growth in crime, including drug trafficking.

With the exponential growth in global trade in recent decades, enhanced access to regional and international markets represented a considerable potential source of growth for Ethiopia's economy.