Fact check of Gita Gopinath’s claim of India slowing down the world economy
IMF (International Monetary Fund) chief Gita Gopinath few days back said that India is responsible for 80 per cent of slashed global growth estimate. Her statement came in the context of cut in GDP growth rate projection for the world between June 2019 and January 2020. Gita Gopinath said that it is simple “arithmetic” that India contributes to 80 per cent to the global slowdown.
Here is the simple arithmetic that arises from the following figures of projected GDP growth rate and the cut in the projection over June 2019 figure:
- World growth rate: 2.5 per cent, a cut of 0.2 per cent
- EU growth rate: 1 per cent, a cut of 0.4 per cent
- USA growth rate: 1.8 per cent, goes up by 0.1 per cent
- Japan growth rate: 0.7 per cent, no change
- India growth rate: 5.8 per cent, a cut of 1.7 per cent
- China growth rate: 5.9 per cent, a cut of 0.2 per cent
- Brazil growth rate: 2 per cent, a cut of 0.5 per cent
- Russia growth rate: 1.6 per cent, a cut of 0.2 per cent
A simple math to understand the slowdown of World Economy
The question comes to mind, Is the projection of world GDP as simple as percentage point cut or rise in an individual country’s GDP growth rate, irrespective of its share in global businesses and irrespective of its size.
A 0.2 per cent of the decline in GDP growth rate in China accounts to $27,216.30 million. In the same way, India’s 1.7 per cent of decline accounts to $46,218.44 million.
The cut of 0.2 per cent in the world’s GDP gives us a figure of $171,819.63 million from the earlier projection. 80 per cent of this comes at $137,455.70 million but India’s contribution was only $46,218.44 million.
The data suggests otherwise but what Gita meant was…
India’s economic strength or weakness could be the reason why Gita Gopinath said what she said. India is the seventh biggest economy of the world but as per the World Bank data, India’s share in the world GDP is little over 3 per cent.
The World Bank Data released on December 23, 2019, says that world GDP stood at $85,909,816 million in 2018. India’s GDP for 2018 accounts to $2,718,732 million. This makes India’s share to the world economy 3.16 per cent. US’s share was 23.91 per cent and China’s share was 15.84 per cent.
India’s share in World trade
Piyush Goyal, Union Commerce and Industry Ministry told in the Lok Sabha in a reply that India’s share in global trade comprising merchandise and services was 2.1 per cent for exports and 2.6 per cent for imports in 2017.
India’s export stood at $481.74 billion out of the total $23,044 billion while import stood at $600.62 billion out of the total $23,112 billion.
India’s import actually contracted by 2 per cent to $212 billion as per the April-November 2019-20 official figures. India doesn’t have such a standing in world trade compared to that of China and the United States.
After looking at all these statistics, it is difficult to think that India could be responsible to pull down 80 per cent of world GDP, even though the chief of IMF says so.
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