Recently, in Davos, Gita Gopinath, IMF's chief economist made the following remark:
Speaking about the lowered world growth estimates, Gopinath said, "We have projected global growth at 2.9 per cent for 2019 and 3.3 per cent for 2020 which is 0.1 percentage point lower than the October estimates. The vast majority of it comes from our downgrade for India which was quite significant for both years."
When asked the extent to which the economic slowdown in India had impacted global forecasts, Gita Gopinath said, "Simple calculation says it would be over 80 per cent."
This was somewhat surprising, at least, at the outset.
India's contribution to world GDP is around 7.45% (Scroll to the bottom of the webpage)
So, how does a relatively small decrease of 1.2% points make such a large difference to world's GDP growth rate? Amounting to whopping 80%???
Where is 1.2% coming from? From IMF's website. See the link. I have taken this as given.
Took time to figure out. Here is how I think it is. Correct me if I am wrong.
Decrease in world's GDP growth rate is 0.1% points. (see the image below. Taken as given)
Decrease in India's GDP growth rate is 1.2% points.
India's contribution to world GDP is 7.45% (0.0745)
Therefore, India's contribution to world GDP growth rate decline = (India's decline) * (India's Contribution to world GDP) / World's decline
= 1.2*0.0745 / 0.1 = 0.894 = 89.4 % (over 80% per IMF)
Now I am relieved. Till I figured it out myself, I was not too sure. Even simple things when not fully understood bother me sometimes to no end! :)
But you can't be too skeptical about what a renowned economist, that too IMF's chief economist, says! :)
Mathematics is funny. It's only when you figure the intricacies out, things make sense. Otherwise, how can we agree with such radical statements?? A country contributing only 8% causing 80% decline due to its own 1.2% decline!! Go figure!! (as I did).
The decrease of 0.1% points for the world and 1.2% points for India is with respect to IMF's estimates from October 2019. You will find that data at this link. Compare it with the latest to derive it for yourself or take it as given.
Also distinguish between percentage versus percentage point. Otherwise, it can be misleading and confusing.
Speaking about the lowered world growth estimates, Gopinath said, "We have projected global growth at 2.9 per cent for 2019 and 3.3 per cent for 2020 which is 0.1 percentage point lower than the October estimates. The vast majority of it comes from our downgrade for India which was quite significant for both years."
When asked the extent to which the economic slowdown in India had impacted global forecasts, Gita Gopinath said, "Simple calculation says it would be over 80 per cent."
This was somewhat surprising, at least, at the outset.
India's contribution to world GDP is around 7.45% (Scroll to the bottom of the webpage)
So, how does a relatively small decrease of 1.2% points make such a large difference to world's GDP growth rate? Amounting to whopping 80%???
Where is 1.2% coming from? From IMF's website. See the link. I have taken this as given.
Took time to figure out. Here is how I think it is. Correct me if I am wrong.
Decrease in world's GDP growth rate is 0.1% points. (see the image below. Taken as given)
Decrease in India's GDP growth rate is 1.2% points.
India's contribution to world GDP is 7.45% (0.0745)
Therefore, India's contribution to world GDP growth rate decline = (India's decline) * (India's Contribution to world GDP) / World's decline
= 1.2*0.0745 / 0.1 = 0.894 = 89.4 % (over 80% per IMF)
Now I am relieved. Till I figured it out myself, I was not too sure. Even simple things when not fully understood bother me sometimes to no end! :)
But you can't be too skeptical about what a renowned economist, that too IMF's chief economist, says! :)
Mathematics is funny. It's only when you figure the intricacies out, things make sense. Otherwise, how can we agree with such radical statements?? A country contributing only 8% causing 80% decline due to its own 1.2% decline!! Go figure!! (as I did).
The decrease of 0.1% points for the world and 1.2% points for India is with respect to IMF's estimates from October 2019. You will find that data at this link. Compare it with the latest to derive it for yourself or take it as given.
Also distinguish between percentage versus percentage point. Otherwise, it can be misleading and confusing.
