No evidence of five per cent growth last year – Chris Ram

May 08, 2014 News

---

Financial Analyst, Christopher Ram, has joined the debate over the questionable growth figures for the economy last year. He says that there is no evidence to support the growth in Gross Domestic Product (GDB) as announced by the Finance Minister.

Finance Minister, Dr Ashni Singh, was challenged in the media to substantiate the reported growth rate. Chief Statistician, Lennox Benjamin, responded by saying, if the writers who initially challenged the Minister have doubts on the figures, they must say what the numbers should be.
According to Ram, Benjamin is confusing the duty of the Stats Bureau to produce accurate and timely information with the right of the public to question the information and to ask for explanations.
He noted that the Stats Bureau reported an inflation rate of 0.9 per cent in 2013, which as  Benjamin “knows is not a national inflation rate but an Urban Consumer Price Index for Georgetown only.”
According to Ram, “The so-called inflation rate of 0.9 per cent for 2013 not only defies all logic but is inconsistent with, and unsupported by the several different specific and complementary measures and indicators to which Mr. Benjamin himself refers.”
Ram queried whether Benjamin is suggesting that no one must question that 0.9 per cent figure on the grounds that they do not have an actual, scientifically determined number of the real rate of inflation.
“Would Mr. Benjamin care to explain the 3.5 per cent inflation projected by the IMF Team in December 2013 after consultation with the Stats Bureau and hazard a guess for the decline to 0.9 per cent within days?”
In defending the National Accounts produced by the Stats Bureau, “Benjamin assures us that its work and the input data received from sectors in the calculation of the GDP are subject to review and recheck by and submission to several international Agencies.”
Ram points out, however, that Benjamin did not name a single such Agency, or distinguish between those which check and those to which the calculation is sent.
Ram said, too, that Benjamin did not concede that the quality of the country’s statistics has from time to time been questioned by respected individuals and agencies such as Professor Clive Thomas and the Economist Intelligence Unit.
In his analysis, Ram points out that with respect to the 2013 GDP numbers, Benjamin used as examples data on sugar, rice, mining and quarrying.
According to Ram, data for these sectors are fairly but not completely straight forward to measure.
“Any errors are likely to understate rather than overstate GDP because of suspected transfer pricing in bauxite, the understatement of gold production and local rice sales.”
Ram noted that in Benjamin’s haste to debunk those who questioned the figures, he “fell into the elementary error of repeating rhetorically that if any one of the sectors or subsectors identified by him was wrong, then the total was wrong, completely ignoring the possibility of compensating errors.”
Ram noted that the real problem which many persons have with GDP figures is with the Services sector which accounted for 58 per cent of GDP in 2012 and increased to 60 per cent 2013.
“Addressing such concerns requires measured, intelligible explanations, not a polemical and emotional reaction. Services include some really hard-to-measure subsectors such as Transportation and Storage, Education, Construction, Health, and Real Estate Activities.”
Ram noted that Benjamin cited the Construction sector in his defence without any apparent awareness that the reported 22.6 per cent growth in the subsector in 2013 includes a substantial correction of an error in the 2012 figures.
“For that year, the Stats Bureau reported negative growth of 11 per cent even though the imports of cement and steel had increased by more than 25 per cent and local sand output was up 76.5 per cent…
“Troublingly, the mid-year 2013 year-on-year growth was reported as 6.6 per cent,” according to Ram.
The Financial Analysis also pointed out that Real Estate activity at the half-year was 1.2 per cent but this grew dramatically to achieve a 5.6 per cent for the full year.
According to Ram, “I join this exchange because of the importance of national statistics to an enlightened debate and informed action.”
Ram suggests that rather than deriding those who question the National Income Statistics as having no clue about what goes into the numbers, the Stats Bureau should be doing far more to explain those numbers and to educate the public.
He further suggested that it would be instructive for Benjamin as the Bureau’s Chief Executive Officer, Vice Chairman and Chief Statistician to let the public know about the adequacy of its staff, the level of fieldwork done by the Bureau, the system in place for evaluating reports received and plans for broadening the statistics now produced.

---

---