Bloomberg Businessweek - USA (2019-07-29)

◼ ECONOMICS Bloomberg Businessweek July29, 2019

28

● Grossdomesticproductfiguresandunemploymentdataarevulnerabletopoliticalmanipulation

India’s Economic Stats

Have a Credibility Problem

for strict data standards. “Once you lose confidence

in the statistical services, it creates a lot of uncer-

tainty in the markets. From the investor point of

view, it raises a red flag.”

Much like China’s official data, India’s sta-

tistics frequently come in for questioning. The

GDP figures have been at the center of a raging

India was until recently the fastest-growing major

economy in the world, clocking annual rates of 7%

or more and sparking predictions that it would soon

overtake the likes of the U.K. and Germany.

Now it looks like that rapid pace may have been

overstated. An academic paper by a former chief

economic adviser to Prime Minister Narendra

Modi estimates annual growth averaged closer to

4.5% a year in the fiscal years from 2011-12 through

2016-17, and says recent changes to the way gross

domestic product is measured are problematic.

Thedatacontroversy,whichhasbeenwidely

airedinthenationalpress,is a blowtoModi,who’s

sethissightsonmakingIndiaa $5trillion economy.

“People have raised issues about the dodginess of

the Indian numbers, and that is a real problem,”

says Steve Hanke, a professor of applied econom-

ics at Johns Hopkins University and a member of

the advisory council of the Society for Economic

Measurement, an international body that advocates

THEBOTTOMLINE Greece’snewleader,Mitsotakis,wantsto

doubletherateofannualGDPgrowthto4%bycuttingtaxesand

boostingforeigninvestment.

Leviesoninvestmentdividendswillbeslashed

byhalfin2020.Thecapital-gainstaxonproperty,

aswellasconstruction-relatedsalestax,willbe

suspendedforthreeyears.

Whilethegovernmenthasmadethecasethat

thetaxcutswillstimulateeconomicactivityand

eventuallyboosttaxrevenue,themeasureswill

undoubtedlyeatintocollectionsinthenearterm.

Thatwillmakeit difficultforMitsotakistomake

goodonhiscampaignpledgetostickwiththe

budgettargetsnegotiatedbythepreviousadmin-

istrationasa conditionforaid.Accordingtothe

existingagreement,Greecemustdelivera pri-

marysurplus—ameasurethatexcludesdebtpay-

ments—equalto3.5%ofgrossdomesticproduct

thisyearaswellthenext.Thenewgovernment

hasstartedtalkswithcreditorstonegotiatesome

wiggleroom.

Prospects forsuchan outcomemayhave

brightenedonJuly19 when German Chancellor

Angela Merkel said Mitsotakis’s program has

“good chances” of generating more growth

forGreece.Astheeuroarea’slargestmember,

GermanyhascontributedthemosttoGreece’s

rescuepackages. And it’s always been the coun-

try with the last word on major policy recommen-

dations for Greece.

Besides having the most powerful woman in

Europe in his corner, the prime minister also can

count on people like Theodora Galanou, a 35-year-

old paint shop owner in Karpenissi, a city in central

Greece. “I want Mitsotakis to deliver on the mod-

ernization of the public sector, growth, new jobs,

andbetterwages,”shesays.“Thatsaid,whatI’m

mostlyaskingforfromhimis togivepeoplemore

optimism.That’swhat’smissingforthemiddle

class. We’re living in a constant gloom.” Says

Galanou: “I believe he can do it.” �Sotiris Nikas,

with Antonis Galanopoulos

“They will

waittosee

duringthefirst

100 days what

the legislative

actions will be

and whether

Greeks will

take to the

streets again”