What is the target sustainable growth rate for an economy?

The target sustainable growth rate for an economy typically ranges from 3% to 4%. This rate is viewed as optimal for achieving a balance between economic growth and the maintenance of inflation at manageable levels. Growth within this range often indicates that an economy is expanding healthily without causing excessive inflation, which can occur when growth rates become too high.

When an economy grows at this sustainable rate, it means that the increase in economic output is consistent with the growth of available resources, such as labor and capital. This balance is crucial as it ensures long-term stability and prevents boom-and-bust cycles that can be harmful to overall economic well-being. Additionally, a sustained growth rate in this range helps to ensure that employment rates remain stable and that the economy can support public services and infrastructure development without leading to unsustainable levels of debt or inflation.