Chinese and Indian GDP Growth Rates are Astounding, disagrees Ruchir Sharma

BENGALURU: Official growth figures of two of the world’s fastest growing economies may be misleading, says Ruchir Sharma at an interview in Hong Kong. Author of the best-selling book “The Rise and Fall of Nations”, Sharma is the head of emerging markets equity and global macro at Morgan Stanley Investment Management.

Talking about India, Sharma is not the first person to doubt the credibility of the new methodology used by the nation’s statistics bureau. Dismissing Indian official figures Sharma opines, “It's quite possible it could be a basic error like getting the GDP deflator wrong. It's credibility in a different way, it's one of incompetence not one of managing the numbers as such.” Making his “best guess”, as opposed to official data depicting an eight percent GDP growth, Sharma says the real numbers are very likely to be around five to six percent. On the other hand he pegs China’s growth between four to five percent. China’s statistics bureau suggests it is more than 6.5 percent.

He compares China’s economy to a ping-pong ball bouncing down the stairs. “Every time the slowdown appears to get a bit severe, they put a new stimulus in place and they get a spike. The moment that stimulus wears off, they go back down again,” explains Sharma. He adds that although China can dodge a financial crisis, economic slowdown is inevitable and already visible.

Whether the whole world agrees upon the figures spilled by Sharma or not, there is no denial when he asserts on the need to change the baseline for judging a country’s economic success, due to a slowing down global economy. “Let's not look for the 7 percent type of economic growth that we thought were going to be the miracle stories. I don't think there are any major Asian economies that I see growing at a sustained pace of about 7 percent in the foreseeable future.”

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