Year Indian GDP Growth (%)
2022 7.00%
2021 9.05%
2020 -5.83%
2019 3.87%
2018 6.45%
2017 6.80%
2016 8.26%
2015 8.00%
2014 7.41%
2013 6.39%
Indian growth rate of above 8% in Q3 of 2023 is not at all extraordinary.
Why?
Take last year average of annual growth rate of India from 2013 to 2022. Its 5.74%.
Now take pre Corona (2020) 7 years and then annual average of GDP growth of India becomes 6.74%.
If we take pre Corona (2020) 5 years average its 6.76%.
So we can say that 6.7% is natural long run average annual growth rate of India in last decade.
Now Corona year 2020 India registered negative growth rate of -5.83%.
This is unnatural number.
Due to negative growth by 5.83% in 2020, India has to show positive growth rate of at least 9% for 3 years and 8% for 5 years to keep long run average at 6.7%.
So it is wrong to think that India is registering extraordinarily high growth rates.
Year Chinese GDP Growth (%)
2022 2.99%
2021 8.45%
2020 2.24%
2019 5.95%
2018 6.75%
2017 6.95%
2016 6.85%
2015 7.04%
2014 7.43%
2013 7.77%
Take last year average of annual growth rate of China from 2013 to 2022. Its 6.24%.
Now take pre Corona (2020) 7 years and then annual average of GDP growth of China becomes 6.96%.
If we take pre Corona (2020) 5 years average its 6.7%.
So we can say that 6.7% is natural long run average annual growth rate of China in last decade.
Now Corona year 2020 China registered abnormally low growth rate of 2.24%.
In 2022 too China registered abnormal low growth rate of 2.99% due to lockdown continuation.
2021 showed higher than normal growth of 8.45%.
Average of 2020 to 2022 is 4.56%.
To catch long run average of 6.7% China needs to grow at 8% for 3 years only.
2023 growth rate of 5.2% is surely below expectation for China.
But that simply implies China will register some higher than average growth rates for next few years.
If Chinese average growth to fall due to quality rise or higher absolute GDP numbers then also 5%-6% must be considered a high growth rate for China.
Year US GDP Growth (%)
2022 2.06%
2021 5.95%
2020 -2.77%
2019 2.29%
2018 2.95%
2017 2.24%
2016 1.67%
2015 2.71%
2014 2.29%
2013 1.84%
Last 10 year average of annual GDP growth of USA is 2.12%.
Pre Corona (2020) 7 year average is 2.28%.
Pre Corona (2020) 5 year average is 2.37%.
2020 to 2022 post Corona year average is 1.74%.
So USA will show some higher than average of 2.3% in next two years to keep average same as 2.3%.
In fact Bloomberg said that US GDP grew at an average of 2.5% in 2023.
2024 will see a bit high growth rate too.
But it is clear that long run average growth of USA has not changed much.
Author: Saikat Bhattacharya
