Friday 19 January 2018

The new normal? Why poor growth may not be just a blip

Harvard University President Emeritus Lawrence Summers. Photo: Reuters
Harvard University President Emeritus Lawrence Summers. Photo: Reuters
Dan O'Brien

Dan O'Brien

The past six years of crisis have changed many things. One of the more benign changes has been people's much increased levels of interest in -- and understanding of -- economics. What is happening in the economy now and in the future is of concern to almost everyone these days.

One manifestation of the new-found interest in the subject is that anyone who pays even the slightest bit of attention to current affairs knows that stronger economic growth is essential if we are to extricate ourselves from our dire public and private debt predicament. It will be very hard to avoid another period of crisis, accompanied by another big decline in living standards, without solid growth over the medium term.

Cold comfort though it may be, but in this regard we are not alone. Many countries have become so indebted that the only realistic way of bringing debt down to safe levels is by an acceleration in the rate of economic growth.

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