From IMF potential Growth Rate (6.7%) to the Target Rate (8%): IMF Projected "Potential" growth and Limits to Growth

A recent IMF study used a number of statistical and modeling based methodologies to conclude that Sri Lanka’s current potential economic growth rate is 6.7%.This implies that the economy is likely to over-heat if the growth rate exceeds 6.7% on a sustained basis, i.e inflation would rise above the mid-single digit target and the balance of payments/reserves would come under pressure. The government growth target is 8%.The challenge, therefore, is to explore ways and means of raising the potential growth rate (6.7%) to reach the target rate(8%), assuming that the IMF estimation of the potential growth rate is credible.