Growthflation

Is it possible to have high economic growth and low inflation?

Most Asian economies devote large amount of subsidies to keep inflation low, while maintaining a modest growth rate.

The new set of forecasts by the Asian Development Bank, suggest that China will be able to achieve that aim...

But then again, China's inflation at 5% seems high, so it's just proof that inflation rates are not completely comparable across country, think the appropriate concept is the inflation divergence away from the norm (i.e. actual inflation less normal inflation)

A country comparison of wealth

Following the previous post, it is only appropriate to do a cross-country comparison of per capita income.

Few takeaways from the graph:

• As has been pointed out in numerous research articles and the media, income growth in China and India has been nothing short of phenomenal in the last decade.
• However, income levels of these economies are still relatively low.
• In comparison, Malaysia's income level is one of the highest amongst the ASEAN-5 and BRIC economies, but growth has been relatively slow.
• Amongst the developed economies, the Newly Industrialized Asian Economies (NIEs, above) have enjoyed high levels of growth in income due primarily to the rise of the large emerging economies
• Income levels of the G7 nations remained relatively stagnant, revealing the extent of growth structural issues pre- and post- financial crisis (declining competitiveness, persistently high unemployment, low birth rates and high public debt levels)

Historical GDP and relative wealth

The most generic economic matrices for development - GDP and income per capita, 2011-15 forecasts by IMF, btw.

Note that the income per capita measure here is not the most often quoted and understandable (US dollars per capita) but is expressed as a form of national production per capita after accounting for purchasing power parity (PPP).

While the calculation of this measure has some weaknesses it gives an idea of the relative wealth scales across countries. Thus the graph tells us that the standard of living of an average Malaysian is 80% less than the average American in 1980; and 69% less in 2010 and by IMF estimations, 66% by 2015.

Of the 4 recessions in the past 30 years, only one has been sourced domestically (1998's Asian Financial Crisis).