Peru To Scrap `Fictional’ Monthly GDP Numbers

29 October 2002 13:15
Dow Jones International News English (Copyright (c) 2002, Dow Jones & Company, Inc.)

By Virginia Rey-Sanchez

LIMA -(Dow Jones)- Peru will scrap its monthly gross domestic product indicator and instead release a monthly indicator of output in various sectors, Farid Matuk, the head of the National Statistics Institute, or INEI, said late Monday. Matuk told journalists that the monthly GDP number had been distorted by unreliable data, especially in the heavily weighted “other services” sector and in the retail sector.

Recently named as head of the INEI, Matuk said Peru had released “fictional information” since 1987 based on the way the GDP number was constructed. “We either continue with the fiction or we make the information realistic,” he said. A new monthly indicator known as “gross value added goods” will be released from next month, when the output for September is reported, he said. “What we will be giving out can’t be called GDP,” he added.

The new indicator will include a primary sector, taking into account agriculture, fishing and mining, and a secondary sector, including manufacturing, construction, electricity and water. Those sectors can also have sub-sectors, he said. But the new indicator won’t measure services contained in the “other” sector, nor growth in the retail sector.
Separate Data On Tax Intake; Move Welcomed

The INEI will also simultaneously but separately release information on movements in tax collections. Matuk said that a newly revised quarterly GDP number will be released after the agency updates the base year used for GDP calculations using data from 2001.

“Investors are going to have much more confidence in this statistic than in fictional information,” Matuk said. He added that the Finance Ministry and the Central Reserve Bank of Peru may give their own estimates for GDP.

INEI recently reported that GDP rose 3.8% in August from the year- earlier month, with the economy expanding 4.1% in the first eight months. President Alejandro Toledo recently predicted that Peru’s GDP will expand 4.0% this year, despite negative growth in Latin America overall. Private sector economists aren’t predicting yet how the statistical overhaul will affect INEI’s bottom-line numbers going forward, but some do think the move by the agency was overdue.

“The main problem with the old GDP numbers is that there wasn’t any exact way to calculate the `other services’ and retail, which meant they had to be estimated indirectly by taking percentages from other sectors,” said Elmer Cuba, an economist with Macroconsult, a local consultancy. Macroconsult said the new indicator will be a better barometer of the economy, as it won’t include calculations using tax collections, which are influenced by factors not tied to the economic cycle. “Until they (the INEI) give out the new GDP, the private sector will have to calculate one each month on the basis of leading indicators,” he added. The Finance Ministry has recently started to release a growth estimate based on a basket of leading indicators.

-By Virginia Rey-Sanchez, Dow Jones Newswires; 511-221-7050;
peru@dowjones.com

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