Three telling recent indicators and why slowing economy needs a boost

There is a need for an economic stimulus, especially when demand growth is slowing and there is spare capacity in the system, but the policy response has been anything but, writes T N Ninan

The last couple of weeks have made three things clear. First, the economy is slowing down. Following the release of the lower-than-expected July-September growth number for gross domestic product (GDP), most analysts have lowered their full-year growth forecasts. Some project second-half growth at under 7 per cent. The encouraging sign is a pick-up in investment, depressed so far, but that is overshadowed by flagging consumer spending. The Reserve Bank recognises this, but continues to project full-year growth at 7.4 per cent. Even that implies a second-half growth rate of only 7.2 per cent — no better than the unsatisfactory trend