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James Heal
James Heal, Financial Advisor
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Why is economic growth important Why could the difference

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Why is economic growth important? Why could the difference between 2.5 percent and a 3 percent annual growth rate be of great significance over several decades?

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Economic growth is important if businesses are to grow and prosper. It relates to growth in the size and quality of the economy as a whole. Growth is measured as the change in the gross domestic product of a country, after subtracting inflation. The economic growth of a country when compared with rivals is an important indicator of rising opportunities for domestic business

 

The long-term path of economic growth is one of the central questions of economics today; an increase in growth rate of a country is generally taken as an increase in the standard of living of its inhabitants. Over long periods of time, even small rates of annual growth can have large effects through compounding or exponential growth. The difference in the annual growth from country A to country B will multiply up over the years. So the difference of .5% over twenty years will be huge given the duration of the time to compound.

 

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