- September 30, 2010 at 9:26 am #55884
An anonymous tip-off regarding Spanish GDP…
Posted by FT Alphaville on Sep 30 09:30.
A highly damaging — and deeply anonymous — piece of analysis started making the rounds on Wednesday. Sent from a specially-created Gmail account, with no named author(s), it explores “discrepancies” within published Spanish GDP figures.
It questions Spain’s official GDP statistics for the period between 2007 and 2009, suggesting the national statistics office may have understated the country’s decline in growth by as much as 14.2 per cent.
We’ve excerpted it below — and while it certainly seems to highlight what appear to be some interesting incongruities — the fact that it’s been published anonymously means it must be treated with kid gloves. Still though, it’s not the kind of thing Spain wants floating around the market this week.
The central premise is that certain indicators and components of Spanish GDP don’t quite stack up with reported national accounts data. To wit, Spanish unemployment rates and GDP ratios:
The reported National Accounts of Spain showed a GDP growth of 0,9% in 2008 and a fall of 3,7% in 2009, thus delivering very reasonable figures compared with other developed economies. However, employment suffered a dismal performance.
As seen, there is a big discrepancy in the Spanish case, in which we should be seeing a much lesser increase in unemployment (following the reported GDP numbers), maybe around 1.5 points (versus the real 9.7 points increase). In all the considered countries the increase in unemployment has been much lesser.
The same goes — apparently — for other countries which have experienced high unemployment (Estonia, Ireland, Latvia, Lithuania, and the like). How to explain Spain’s outperformance?
The anonymous author(s) has an idea.
The big question then, according to the author(s), is the ‘real’ level of Spain’s GDP. Using a deviation of 24 per cent in market services, 5 per cent in manufacturing and 6 per cent in construction, the author comes up with a 17.3 per cent fall in GDP between the fourth quarter of 2007 and Q4 2009 — far less than the published 3.1 per cent. If you use that GDP figure, you appear to get a GDP/unemployment ratio much more in line with other countries that have suffered massive bouts of structural unemployment:
The anonymous author(s) suggests this is a “falsification” by the Spanish government, and one that was done to prevent it from falling into a Greek-like debt trap in the markets. We’ve contacted the INE to discuss.
- September 30, 2010 at 10:25 am #100976
Well, if Spain’s GDP figures are anything like its housing market figures…….anything is possible.
- October 1, 2010 at 10:00 am #100990
Okay, we have removed the original post here because we were taking just too much heat, life’s too short and we’d even started to question the (political) motives of the anonymous source.
But we’ve left the comments, so people can continue the debate if they like.
Backstory: a piece of analysis has been doing the rounds in Madrid and London questioning the veracity of various Spanish economic statistics. Right-wing Spanish media got wind of it on Thursday and somewhat bizarrely broadcast it as having been endorsed by the FT.
For the record, this was not the case.
We carried excepts from the analysis and tried to get some explanation for apparent anomalies in the numbers — but without much success. The Instituto Nacional de Estadística didn’t get back to us with a detailed response, and the Finance Ministry fumed.
In the meantime, as the dialogue below indicates, everyone’s gone nuts.
- October 2, 2010 at 2:45 pm #101000
When ever these reports surface and there has been several rumours in the last few years of figures being massaged and covered up the governments response is always the same. Shoot the messenger. Or it’s an Anglo-Saxon conspiracy by short sellers.
I have said for some time on here that Spanish economic figures didn’t add up. Manipulation of state economic data is a national sport within the EU. Particularly in France where they simply don’t understand market economics or the value of competition.
Given that the property market is being currently manipulated by banks, ECB and just about every other institution it would very surprising if it ended there.
However if the experience of Greece is anything to go by, they can only do it for so long before the dam bursts and the truth is revealed. Then the only sanction against those responsible for the mess they leave behind is a change of government. Then off they shuffle with fat pay off’s and retirement pensions.
Spain is not Greece we hear them say. Don’t believe it.
- October 2, 2010 at 7:19 pm #101001
Logan, manipulation and hiding the truth is rife within the Spanish and other Euro Gov’ts, but also within the UK’s Gov’t.
The UK have massaged unemployment figures for years with various schemes like further education, back to work clubs, voluntary work, low income claimants etc etc.
The BOE have been exposed by someone on the MPC for deliberately keeping interest rates low for savers to try and make them spend capital, whilst helping those with Liars Loans have low rates too.
The UK property market, although different for various reasons from Spain’s, is paramount for the Gov’t/Banks to keep healthy because the UK has very little manufacturing now and people spend when property rises.
Those with vested interest talk markets up.
I think whatever the country that ‘all Gov’t is corrupt’ to various degrees unfortunately that includes the UK and it’s Banks and dodgy regulators like the FSA.
Spain’s could lead the world on manipulation and false figures though 😉
- October 4, 2010 at 7:00 am #101008
Some interesting comments here from the great economic oracle Joseph Stiglitz.
I like the idea that Germany should leave the Euro to allow the PIIGS to recover from a market currency devaluation. His comments about Spain are gloomy indeed.
Ambrose Prichard believes the IMF and ECB are writing off the PIIGS as a basket case. I agree.
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