Statistical
deception
Last week I examined one of two recent instances of what I described as official misuse and abuse of Guyana’s economic statistics. That was the absurd inference contained in the Minister of Agriculture’s boast where he stated that, since the PPP/C administration assumed office in 1992, Guyana’s GDP at current prices (nominal GDP) has increased by over 15 times. This I suggested is a statistical deception and should not deceive anyone with the faintest acquaintance with economics or who has had personal experience of Guyana’s economic performance since 1992.
I had also brought to readers’ attention that the GDP at current prices has to be deflated by a GDP deflator (which measures price changes for items in the GDP) to arrive at real GDP growth before making comparisons over time for the same country. As noted the GDP deflator is not the same as the consumer price index, and several readers have since asked for information on how these two price indexes have performed in recent years. Table 1 exhibits the movement of these two indexes over the years for which there are data on the rebased GDP series (2006 prices)
Inflated
growth rate
The second official statistic about which I have great concern and which is the main subject of today’s column is the announcement of a real GDP growth rate of 5.9 per cent for the first half of 2011. This announced rate is more than twice the first half year growth rate reported for 2010. Moreover, much of this growth is predicated on increased output of sugar. This is worrying since sugar production has had a shortfall of over 30,000 tonnes below GuySuCo’s target for its first crop. Indeed GuySuCo’s target for all of 2011 (298,879 tonnes) calls for less sugar to be produced than the amount obtained four decades ago.
The government has never previously shown evidence of having constructed half-yearly or quarterly national accounts data. The suspicion among analysts is that this is still so. No detailed figures for the half-year national accounts have been presented in the Half-Year 2011 Econo-mic Report published by the Ministry of Finance. Instead, what we are presented with are national and sectoral growth rates with no indication of the values which inform the changes to the growth rates. This looks very much like what economists call a back of the envelope guesstimate of the growth rates. The question therefore to be asked is: are these to be followed later with numbers that seek to justify the back-of-the-envelope guesses.
One does not know for sure, but logically the sequence to be followed should be the other way around. That is, the national accounts and its components are first constructed and valued, and from these the growth rates are derived. The other way around can only be utilized for propaganda purposes; it is a bad, unprofessional and unethical way to arrive at official economic statistics. One should not guess growth rates, present them to the public, and then construct national accounts values around these in order to confirm them.
Statistical
integrity: The
EIU challenge
There are other instances where Guyana’s growth rates have been challenged. Readers would recall media coverage of the Economist Intelligence Unit’s (EIU) Report (April 2010) which stated: “Although no official full-year GDP data had been released … at the time of writing, the Minister of Finance, Ashni Singh, claimed in the 2010 budget speech that real GDP grew by 2.3% in 2009; if confirmed, this would make it one of the only countries in the hemisphere to record economic growth last year.” It then went on to claim: “The estimate stands in stark contrast to the EIU’s estimate of a full-year real contraction [my emphasis] of 0.9 percent” (page 17). The report more generally expressed: “Doubts about the latest official GDP estimates – and statistical integrity overall in Guyana” (my emphasis) (page 11).
This questioning of the official statistics is distressing, as it devalues Guyana’s reputation. Readers may well ask: What are the international organizations that use these data doing about it? For one, inter-governmental organizations like the IMF and World Bank have little scope to challenge what are presented to them as “official” statistics”! Perhaps if the country was under an agreed programme (say IMF) the attached conditionalities may allow pressure to be exerted for more accurate data. However, even in such an instance, having to deal with a sovereign government that is bent on abusing and misusing statistics, they would find their hands tied because of “sovereignty” concerns.
Instead it has become the practice for these organizations when utilizing suspect data for rigorous statistical or econometric analysis, to indicate that they are utilizing both national statistics and their own statistical series. Since these latter are not released to the public and remain secured under the control of the organization, by not publishing them and restricting their access, these organizations are complicit in the political misuse of statistics.
Data secrecy
Despite this, the IMF has not been able to completely hide its real concerns. Although stating politely, as it routinely does, “the quality of statistics is improving” in Guyana, it went on to stress in a recent (2011) report “data provision needs further strengthening … coverage of other key macroeconomic variables needs improvement in terms of quality, periodicity and timelines of release” (my emphasis).
This 2011 report ended its appraisal of measures to improve official data by welcoming the authorities’ consent to subscribe to the IMF’s General Data Dissemination System (GDDS), as this would ensure more access for the public.
However, it should be noted that, although the GDDS was established since 1997, sadly Guyana only became the 100th participant in this system earlier this year (June, 2011). This occurred more than a decade after other Caricom economies had signed on to the GDDS.
The next topic I shall address is the sham the LCDS is turning out to be.
Table 1: GDP Deflator and Consumer Price Index (% Change)
Year GDP Deflator Consumer Price Index (% change)
2007 9.3 14.0
2008 12.3 6.4
2009 – 0.4 3.5
2010 6.0 4.5
Source: Government of Guyana, Official Statistics
