Renewed worries about China appear overdone, and
we see real growth rate holding near 6.5 % for now.
Not exact matches
That said, the equation fits the cycle pretty well (
see Graph 5)[8] and Graph 6 shows the impact on GDP
growth of a 1 per cent increase in the
real cash
rate, maintained for two years.
Ultimately, we
see the dollar weakening against the euro as
real rates in the Euro Zone become more positive and strengthen versus the yen because inflation in Japan is picking up due to accelerating wage
growth.
More straightforwardly if you
see weaker
growth despite lower
real interest
rates that tends to confirm the secular stagnation idea.
Surveys of investment intentions point to continued
growth in business investment in
real terms, albeit at lower
rates than the robust
growth seen through 2003.
Real rates have been declining for some time, due to slower productivity
growth, demographics, and other factors (
see Powell's January 7, 2017 speech).
Some economists are saying that today's sluggish
real (inflation adjusted) gross domestic product (GDP)
growth rate of about 2 % a year could even become the new «cruising speed» for the Canadian economy — a big comedown from the 3 % annual
growth we've typically
seen in the past.
Conversely slower
growth companies like
real estate investment trusts (REITs), utilities and telecom companies, which are
seen as bond proxies because they deliver a steady cash flow to investors, have a tendency to lag as
rate climb.
It can be
seen that the social discount
rate, ρ, results from two distinct components: A component known as the «pure time preference», encapsulated by δ, and a component that combines the expected average annual
real economic
growth rate, g, with a parameter η that turns out to capture people's inequality aversion.
We don't
see the dark - side of soaring
growth rates in the celebratory media footage of stockbrokers jumping for joy on the trading floor but it's
real and increasingly evident.