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Overview

The risk of inflation

If the economy grows due to excessive demand in the economy, there is the danger of demand-pull inflation

Increased stress and anxiety.

A growing economy is a dynamic economy that undergoes structural changes. Economic growth may also be accompanied by increased working hours and pressure to come up with new ideas and improvements.

Resource depletion

Economic growth may be accompanied by the depletion of natural resources and damage to the environment. Higher output may, for example, involve firms using more oil, depleting fish stocks, building on greenfield sites and creating more pollution.

Environmental consequences

Much economic activity tends to create pollution, such as acid rain and nuclear waste. It leads to emissions which threaten to produce disruptive climatic changes through an increase in the 'greenhouse effect'. It results in more roads, new and larger towns, and less unspoilt countryside.

Sustainability

Very rapid economic growth may be achieved but this may be at the expense of the living standards and quality of life of future generations if it results from the reckless use of resources. Both developed and developing countries are now becoming more concerned to achieve sustainable development. This occurs when output increases in a way that does not compromise the needs of future generations.

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Costs of economic growth

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