What indicates persistent excess capacity in the economy?

Slowing nominal growth and 25 months of falling core inflation signal persistent excess capacity.

Are recent policy reforms sufficient to address economic challenges?

The scale of recent reforms, including GST rationalization and new labor codes, appears modest against entrenched challenges in private consumption and investment.

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Economy Stagnant: Old Math Hides Real GDP Woes

2 Feb

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Summary

Anachronistic methods obscure real GDP growth estimates.
Nominal growth is slowing with falling core inflation.
Reforms are modest against entrenched consumption challenges.

Economy Stagnant: Old Math Hides Real GDP Woes

Anachronistic statistical methods are obscuring estimates of real GDP growth. This is occurring alongside slowing nominal growth and 25 months of falling core inflation, which collectively indicate persistent and potentially widening excess capacity.

Policymakers have responded with measures including rationalizing GST and establishing a framework for deregulation. New labor codes have also been implemented. Despite these reform efforts, their overall scale seems modest when assessed against the deeply entrenched challenges affecting private consumption and investment.

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