, but plausible numbers – which assume that other oecd countries achieve the same per capita growth rates over the next 10 years as they did in the nineties – would require gdp per capita growth in new zealand of about it is not hard to see why a tax system that allows the deductibility of nominal interest payments in full – even when much of the interest paid in a high inflation environment is, in reality, a compensation to the lender for erosion in the capital value of the loan – but does not tax the increase in the nominal value of the asset strongly encourages people to borrow heavily to invest in real estate in an inflationary environment. it is also the case that, in allowing deductions for depreciation based on historical cost and taxing profits on inventory on the basis of the historical cost of acquisition, the tax system, in an inflationary environment, over - taxes, and thus discourages, investment in other kinds of businesses. 3. 6 per cent per annum, somewhat more than double the growth in per capita gdp achieved by new zealand in the nineties. can a doubling of our per capita growth rate, as compared with the average of the nineties, be achieved? i am sometimes surprised to hear people argue that such a goal should be easy to accomplish. why, it is occasionally argued, some companies have grown by 10 per cent annually for years! even whole regions sometimes grow at rates which are well above the growth rates suggested as being necessary to raise per capita income levels to the median of the oecd. but what is often overlooked in making such comments is that a company may grow at a high rate for years because it can absorb resources of people and capital from outside itself ; regions can similarly grow rapidly by absorbing people and capital from other areas. new zealand as a whole may increase its gross output more rapidly by bringing in lots of additional people and lots of additional capital, but that increase in gross output may produce only a modest increase in the per capita incomes of new zealanders. no, doubling the growth in per capita incomes would be extremely difficult. but perhaps it would not be impossible. some other small countries – finland, ireland, and singapore are the most frequently cited examples – have achieved similar or even greater increases in per capita income, but it has been a very rare achievement, sometimes made possible in part by starting from a situation of economic collapse ( finland ), and sometimes made possible in part by being able to bring very large numbers

, we have had the opportunity to see that, contrary to the earlier expectations of market participants, y - o - y inflation in most advanced and emerging economies increased further. euro area inflation rose from 5. 0 % in december to 5. 1 % in january, reaching double - digit levels in some members. although this does not, at first glance, confirm the assessments of leading central banks about the temporary nature of current inflation, one should bear in mind that in most countries inflation is still largely driven by rising energy and food prices. also, there are countries that are faced with high core inflation, both due to the strengthening of depreciation pressures on their national currencies, and the overheating of their economies in the pre - pandemic period. as for inflation in serbia, according to our new projection, we expect y - o - y inflation in q1 2022 to move around the december level of 7. 9 % or slightly above it, and then to decline from q2 onwards and settle in the range from 3. 5 % to 4 % at year - end. going forward, it is expected to slow down further and move around the target midpoint until the end of the projection horizon. the effects of the new agricultural season will contribute the most to the slowdown in inflation, as they will directly affect the prices of fruit and vegetables, and through lower production costs, the prices of processed food as well. we expect that the gradual exit from the pandemic will help reduce the supply - demand gap globally and solve the problem of halts in supply chains, which could, consequently, lead to lower cost - push pressures. an important factor of lower inflation will be the expected subsiding of cost - push pressures on account of the prices of oil, gas, electricity and primary agricultural commodities, according to futures, as well as the drop - out of last year ’ s hikes in petroleum product prices from y - o - y calculations. as any other projection, this projection carries its own risks, which are associated mostly with the international environment and are slightly skewed to the upside. my colleagues will explain them in more detail later on. chart 1inflation projection ( y - o - y rates, in % ) - 1 source : nbs. amid stronger cost - push pressures and the need to impact inflation expectations and prevent the second - round effects of rising global food and energy prices on other products and services, the nbs continued