Mstyslav Chernov/Unframe/unframe.com
"In my opinion, official statistics are getting worse and worse - says one of the Japanese officials, who deals with economic policy. - It is necessary to rely more on qualitative data to evaluate economic activity. "
According to official figures, in 2014 Japan's GDP declined by 0.9%. Statistics suggest that the country's economy was severely damaged that year due to increase of the sales tax from 5 to 8%. It caused the recession, which, in turn, had a negative impact on wages, and companies' plans for investment in the next year. However, alternative data show that there was no recession. BOJ’s experimental estimates showed that GDP growth in 2014 was equal to 2.4%.
Bank of Japan’s economists grew suspicious as as official GDP data showed that household expenditures exceeded savings, and operating profit declined. This was contrary to other papers, which showed bank customers’ higher savings, increase in tax revenues and record corporate profits. Using data from tax returns, rather than surveys based on the official data of GDP, the central bank has calculated value of gross domestic income, which theoretically should be equal to GDP. Not only have these estimates suggested that the economy has grown, but that the actual GDP was equal to 556 trillion yen ($ 5.5 trillion) in 2014. This is significantly higher than the official value of 525 trillion yen.
"It is difficult to say whether the assessment of the Bank of Japan or the official data are correct. Perhaps they are all wrong, - said Tsutomu Watanabe, Professor at Tokyo University of Economics and one of the government economists. - The strong discrepancy clearly complicates the task for the authorities."
There are several versions explaining the discrepancy of numbers. Firstly, the new and fast-growing companies are not involved in the economic census, but fill in tax returns. Second, companies could have provided understated sales data in 2014, if we consider the sales tax at the old rate of 5%, instead of the new 8%. In addition, there is a big problem: increasingly fewer people want to take part in official surveys.
"The Bank of Japan uses data from tax returns, which is certainly more exhaustive than excerpts from GDP. However, these data become available only in a year ", - says Yosimasa Hayashi, a member of parliament and the ruling Liberal Democratic Party of Japan. He is working on a project to improve the quality of economic statistics. He wants to gather information not by polls, but directly, using new technologies and analysis of large data. His working group also intends to change the standards of GDP calculation in order to reach the growing service sector.
source: ft.com
According to official figures, in 2014 Japan's GDP declined by 0.9%. Statistics suggest that the country's economy was severely damaged that year due to increase of the sales tax from 5 to 8%. It caused the recession, which, in turn, had a negative impact on wages, and companies' plans for investment in the next year. However, alternative data show that there was no recession. BOJ’s experimental estimates showed that GDP growth in 2014 was equal to 2.4%.
Bank of Japan’s economists grew suspicious as as official GDP data showed that household expenditures exceeded savings, and operating profit declined. This was contrary to other papers, which showed bank customers’ higher savings, increase in tax revenues and record corporate profits. Using data from tax returns, rather than surveys based on the official data of GDP, the central bank has calculated value of gross domestic income, which theoretically should be equal to GDP. Not only have these estimates suggested that the economy has grown, but that the actual GDP was equal to 556 trillion yen ($ 5.5 trillion) in 2014. This is significantly higher than the official value of 525 trillion yen.
"It is difficult to say whether the assessment of the Bank of Japan or the official data are correct. Perhaps they are all wrong, - said Tsutomu Watanabe, Professor at Tokyo University of Economics and one of the government economists. - The strong discrepancy clearly complicates the task for the authorities."
There are several versions explaining the discrepancy of numbers. Firstly, the new and fast-growing companies are not involved in the economic census, but fill in tax returns. Second, companies could have provided understated sales data in 2014, if we consider the sales tax at the old rate of 5%, instead of the new 8%. In addition, there is a big problem: increasingly fewer people want to take part in official surveys.
"The Bank of Japan uses data from tax returns, which is certainly more exhaustive than excerpts from GDP. However, these data become available only in a year ", - says Yosimasa Hayashi, a member of parliament and the ruling Liberal Democratic Party of Japan. He is working on a project to improve the quality of economic statistics. He wants to gather information not by polls, but directly, using new technologies and analysis of large data. His working group also intends to change the standards of GDP calculation in order to reach the growing service sector.
source: ft.com
