There are simple home truths that seem to elude those drumming the beat of growth at any cost. One, our debt levels are such that we need to be generating primary surpluses to avoid further sinking into debt trap. Two, we don’t have the reserves to service both CAD and ext debt.
Any level of growth (c4%) that aggravates those two very basic constraints in our economy is essentially overheating. We can play verbal gymnastics and fine tune the semantics till the cows come in, but the only way out is maintain growth at that level that does not worsen either
So we either control aggregate demand to be inline with our output capacity or just resign ourselves to an even larger IMF bailout program not too far out in the distant future. We can all try to be clever about it but when the $s run out there’s not many other alternatives
Until we decide to bring about structural transformation of the economy to increase overall TFP and can export much more than we presently are able to. And this can’t be done concurrently by continuing to grow in the wrong direction
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