labels: World Bank
India, China economies 40 per cent smaller than projected: World Bank news
18 December 2007

Mumbai: The economies of China and India are about 40 per cent smaller than earlier estimates, according to the World Bank's revised estimates using consumers' relative purchasing power to measure economic might.

Instead of merely converting local currency estimates of gross domestic product (GDP) of individual countries into dollars, the revised estimates take into account the wide variations in the purchasing power of a dollar from country to country.

While a dollar converted into 7.4 yuan or Rs39 will generally buy more food in China and India, respectively, than it would in the US, the bank's latest revision under its purchasing power parity method, based on updated data, shows that the fast-growing economies of India and China are in fact about 40 per cent smaller than originally thought.

China is ranked the world's second-largest economy, with its gross domestic product accounting for 9.7 per cent of the world total, behind the US, which accounts for 23 per cent, it said. Earlier estimates based on older data said China's GDP accounted for 14 per cent of global GDP.

Japan was No 3, Germany was ranked fourth, and India came in fifth, with more than four per cent of total world output.

Together, those five countries account for half of world economic output, the World Bank said.

``These results are more statistically reliable estimates,'' the World Bank said in a statement, adding that like all statistics, these too are subject to errors and should be treated as approximations.

Under the new estimates, the number of Chinese living on less than $1 a day - a benchmark for poverty - is nearly 300 million, against the earlier estimate of 100 million.
 


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India, China economies 40 per cent smaller than projected: World Bank