Some stability, but risks remain

With destocking over, growth is stabilising but its revival faces several pro-cyclical headwinds

The (only) good feature of destocking-led economic slowdowns is that they end. After all, you cannot keep cutting inventories indefinitely. A significant part of the worryingly precipitous decline in gross domestic product (GDP) growth over the past six quarters was a drop in inventory: As GDP measures activity, inventory build-up adds to growth, and lower inventories take away from it. This is evidenced by the sharp divergence between growth rates in services and industry over the past six quarters, and the drop in the goods and services tax (GST) collections. There may be measurement-related issues in quarterly services growth (only