India’s GDP growth in the Sep 2015 quarter came in at 7.4%, which would be awesome, except that it’s the “real” GDP, which is the number that you can see (“nominal” GDP) minus inflation. This time, apparently, the nominal GDP growth was LOWER than real GDP, at 6.04%, which means inflation is negative.
This kinda sorta makes sense, you might think. Look, the oil price crash (which happened at the end of September last year) has seen the oil prices fall tremendously. We have seen nominal GDP growth fall tremendously in December 2014. Metal prices have now crashed. Much about everything in the rest of the world is running on lower prices.
But for India as a whole, consumer price inflation is still above 5% and remember that consumption by private entities forms a huge part (over 60%) of the GDP. Which begs the question – what fell so much to offset it? It’s a little difficult to believe the 7.4% headline real GDP number.
Read more at http://capitalmind.in/2015/12/the-gdp-in-charts-deflation-helps-indian-economy-grow-7-4-but-nominal-growth-at-6
This kinda sorta makes sense, you might think. Look, the oil price crash (which happened at the end of September last year) has seen the oil prices fall tremendously. We have seen nominal GDP growth fall tremendously in December 2014. Metal prices have now crashed. Much about everything in the rest of the world is running on lower prices.
But for India as a whole, consumer price inflation is still above 5% and remember that consumption by private entities forms a huge part (over 60%) of the GDP. Which begs the question – what fell so much to offset it? It’s a little difficult to believe the 7.4% headline real GDP number.
Read more at http://capitalmind.in/2015/12/the-gdp-in-charts-deflation-helps-indian-economy-grow-7-4-but-nominal-growth-at-6
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