Estimating the potential output is another factor that complicates the management of the growth-inflation balance in EMEs. This is a difficult task everywhere, but is particularly difficult in EMEs because of large under-utilized capacity coexisting with supply constraints.
Consequently, it is difficult to get an accurate estimate of the output gap and of the excess demand embodied in it, making the challenge of monetary policy calibration that much more complex. 14. I could go on with several other examples to illustrate how the growth-inflation dynamics in EMEs are structurally and analytically different from those in advanced economies.