Getting financial institutions to a healthy state when they can begin to lend confidently is most crucial for faster growth
We bid goodbye to 2019 with a sigh of relief. Anything that could go wrong went wrong during this year. Growth rate plummeted. From the level of 8.1% in the fourth quarter of 2017-18, quarterly GDP growth fell to 4.5% in the second quarter of 2019-20, a fall of 3.6 percentage points. This steady decline must have had an adverse impact on employment and poverty reduction. Will 2020 be better? What can be done to make it better?
Structural or cyclical
Analysts debate whether the slowdown is structural or cyclical. Does the difference matter? Yes, to some extent. If it is cyclical, the expectation is that there is a chance for upturn soon. If it is purely structural, it will take time until the structural rigidities are removed. Normally, the slowdown is cyclical if it results from a weakening of demand. There is plenty of evidence on this as far as the current situation is considered.
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