For this post, I want to focus on a striking statistic mentioned in the IMF's press statement. According to their preliminary assessment, the rate of growth of the economy (GDP growth rate) for 2015 was only 3%. Their assessment, if accurate, implies that this is the lowest growth rate the economy has registered in 15 years (see the figure below).
Source: World Development Indicators Database
In 2000, the economy grew by about 4% and the rate of growth increased right through that decade. The average growth rate for the decade 2000 to 2010 was a healthy 7% per year and in 2010, for probably the first time in our history, we hit double digit growth. The economy, in that year, grew at 10%! Since then, the trend has been downward, although still respectably healthy. For the four years running from 2011 to 2014, the average rate of growth has been 6%.
So the 3% for 2015 is really an outlier in what has otherwise been an incredible growth story.
And growth rates matter. Growing at 7% per year implies that the size of your economy doubles every 10 years (see Rule of 70). Growing at 3%, on the other hand, implies that you take twice as long to double the size of your economy.
We need to quickly get the economy growing again at about 7% per year.
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