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Directions: Read the passage carefully and answer the questions given below it. Certain words/ phrases have been given in bold to help you locate them while answering some of the questions.

The global economy has been stuck in a low-growth environment since 2012, largely as a result of the 3 D challenge: Debt, Demographics and Disinflation. Indeed, while the developed market (DM) economies have been grappling with these issues for some time, a number of emerging market (EM) economies have also joined the 3 D club.

Specifically within Asia, except for Japan (which accounts for 68% of EM), of the 10 top economies in the region, seven have debt-to-GDP close to 200% or above; six are facing a rising age dependency ratio (ageing population is growing faster than working-age population) and eight have GDP deflator growth below 2%. These challenges have led to a slowdown in global growth. We estimate that the global economy will grow by 3% this year, which will mark the fifth consecutive year that global growth will be below the 30-year average of 3.6%. Moreover, a large number of EM economies are facing both the cyclical challenge of wide output gaps and the structural challenge of decelerating potential growth at the same time.

Against this backdrop, India stands out as one of the few large economies that do not face these issues. However, strong structural fundamentals arc clearly necessary but not sufficient in ensuring strong growth outcomes. The deep cyclical slowdown that occurred from 2011 lo early 2014 was due to a systematic distortion of the productivity dynamics arising from poor policy choices in the-post-credit crisis environment.

We attribute it to the four key macro policies: high revenue deficit, high rural wage growth with labour market policy intervention, persistent negative real interest rates and breakdown in investment approval process post emergence of corruption scandals.

Over the last three years, there has been a concerted policy effort to reverse the productivity distortion and the results have been reflected in macro stability indicators such as inflation, current account and financial stability returning to within the comfort zone. This marks the first stage of recovery from a typical EM down cycle - where improvements in macro stability reduce the macro risk premium. Despite these improvements, the transition to Stage 2 - a path of growth recovery - has taken longer than expected, as the continued weakness in the global economy weighed on exports and manufacturing business sentiment, while the recovery in the domestic market proceeded at a very gradual pace from the deep cyclical slowdown of the preceding years.

The initial pick-up in growth was driven by public capex as the government increased capex spending largely through off-budget sources. The government also took measures to improve the investment climate through streamlining of approval processes and creating an overall conducive, business-friendly environment. This led to a significant acceleration in foreign investment flows with FDI flows rising to an all-time high.

 

Which of the following statements with regard to the economy of Asian countries is/are not true?

A)  Of the 10 top economies in the Asian region, 7 have debt-to-GDP close to 200 per cent or above.

B)  Japan is the only country in the Asian region which has the least number of emerging markets.

C)  Oni of the top ten economies in Asia, six are facing rising age dependency ratio.

D)  Both [a] and [c]

E)  None of the above