Fact-check: Did the US Economy declined more compared to India's?

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A lot of noise is there on social media regarding the US and India’s GDP numbers. A claim is made over the social media that a few leading news portals have misrepresented India’s GDP numbers compared to that of US.

This is the picture which is floating all over LinkedIn and Twitter.


And regarding US GDP data:


Let’s have a brief look at the calculation methodology:

What does it mean when we say that US GDP has contracted 9.5 % in the Q1?

Assume US GDP to be 100 (April 2020).
Now a 9.5% contraction for Q1 2020 means 100*(1-9.5%) = 90.5

Extrapolating it forward, the change in the upcoming quarters will be:

Q2 2020: 90.5 * (1-9.5%) = 81.90
Q3 2020: 81.9 * (1-9.5%) = 74.1
Q4 2020: 81.90*(1-9.5%) = 67.1

So, from 100 to 67.1, a difference of -32.9 and when annualized it is -32.9% (Base was 100).

If we do the same calculation for India:


Now projecting annualized decline numbers for India just like the US:


A whooping annual decline of -75%.

If we do a Q/Q computation on US GDP data with Indian computation method, this is what we get:


Now if you see the same erroneous post anywhere you know where to refer them.

P.S: 
  • Those who need the excel files can mail me at (vaibhav.pgp18159@iimkashipur.ac.in).
  • Special thanks to Vivek Kaul for the brilliant article written by him on this topic (click here), which lead me to research further on this issue.
  • I have not made any assumption in the calculation. The methodology used by both the countries have been used and that's why my calculation matches with that of Newyork Times, Washington Post and with US official data.



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