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Economy Stagnant: Old Math Hides Real GDP Woes
2 Feb
Summary
- Anachronistic methods obscure real GDP growth estimates.
- Nominal growth is slowing with falling core inflation.
- Reforms are modest against entrenched consumption challenges.
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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