And to answer this photoshoped graphic.
All this seems to have irked economic commentator Vivek Kaul enough to write a blog post explaining why this comparison — US GDP contraction of 32 per cent versus India’s 23.9 per cent in the June quarter – is absolutely wrong.
Here's the deal
"Different countries use different approaches when calculating GDP," explains Madan Sabnavis, Chief Economist, CARE Ratings. "We do year-on-year (YoY), while several others do quarter-on-quarter (QoQ). Hence, while we compare Q1FY20 with Q1FY19, other countries may compare Q2 (i.e. April-June) with Q1 (Jan-March) after removing the seasonality factor," he adds. That’s where the difference lies in how India and the US report GDP growth. In India, GDP growth for a quarter is calculated by comparing to the same quarter the year before, a YoY comparison, which puts India’s GDP contraction at 23.9 per cent for the June quarter.
On the other hand, the US does a QoQ comparison, and then annualises the figure. Meaning: GDP for a quarter is compared to the quarter before it. So they assumed that this quarter's fall would continue at the same rate for the next three quarters, which resulted in an estimated contraction of 32 per cent for the US economy on an annualised basis.
If they had done it QoQ, the comparable figure of contraction for the US economy would be 9.1 per cent, according to a tweet by Gita Gopinath, Chief Economist, IMF.
Many on Twitter seemed to have bought into the narrative that India performed better compared to its peers, contracting much less in the April-June quarter.
economictimes.indiatimes.com
Teray bass ka kam nahi hai, tou republic tv dekh aur uchalta reh....