Over the last decade, it says in its most recent annual filing, consumption here has grown at a compound annual growth rate of 7%.
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Squeezing down current consumption and encouraging maximum saving and investment produces a higher growth rate and higher standard of living some time in the future.
Consumption of bottled spirits in China has increased at a compound annual growth rate of 20 percent over the past five years, according to data from the National Statistics Bureau.
We expect 1.7% growth in real personal consumption expenditures in the four quarters ending September 2008 even under our soft-landing scenario, below the 2% four-quarter low in the 2001 recession (see graph and further discussion in the attachment.) In recent years, we predicted and explained the resilience in U.S. consumption growth in terms of job prospects and the high actual household savings rate.
But to sustain a high growth rate, the economy needs to shift away from investment and exports towards domestic consumption.
While demand growth in OECD countries is underwhelming, consumption rates have recovered from recession lows at a much faster rate than many expected.
The FairTax, which taxes only consumption, and does not tax savings and investment at all, will produce the highest rate of economic growth of any of the proposed tax reform plans.
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"We believe that the government will react to this weaker-than-expected GDP growth rate by introducing more policy measures to boost lending, speed up project starts, encourage consumption, and support property sales, " Jun Ma, Deutsche Bank greater China chief economist said.
It is no coincidence that the Philippines has the highest rate of consumption (about 80% of GDP) in emerging Asia but one of the lowest growth rates.
Legislation to increase the country's rate of consumption tax, enacted last August, states that the government must try to achieve nominal economic growth of about 3 per cent and real growth of about 2 per cent -- implying inflation of about 1 per cent -- before going ahead with the tax hikes.
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