Thursday, September 03, 2009
"YESTERDAY'S GDP figures are certainly wrong. But for now, we don't know which of its figures are wrong - and so we don't know Australia's real rate of economic growth.
Sorry, but that's the truth.
The figures released yesterday do not add up. They will be heavily revised. Their bottom line could be flipped upside down, turning growth negative.
For now, the Bureau of Statistics estimates that the economy grew by 0.6 per cent in the year to June. Wayne Swan was triumphant yesterday, declaring Australia the only advanced economy to record growth in the past year. An economic gold medal for Australia - and thanks to his stimulus!
Well, what do the figures say?...
They tell us our gross national expenditure in the June quarter was actually a tad less than a year earlier. The reason our output grew, it says, was that we imported far less of what we consumed - import volumes fell 13 per cent year on year - yet our export volumes held steady, even rising 3 per cent in the first half of 2009! Hmm.
Consumer spending, flat in 2008, has picked up in 2009, presumably thanks to the cash splash. Business investment plunged in March, but edged up, presumably thanks to the investment tax break. But home building was still in a slump, despite the first home buyers stimulus, and government investment remained flat.
Those bits of the story are believable. The bureau also tells us that production in most industries went backwards in the year to June. Non-food manufacturing output slumped 11 per cent, and even mining was down. Company profits fell 10 per cent. But the bureau's stories don't add up.
It always gets its GDP estimate by averaging three sets of data on incomes, production and expenditure. Usually they're pretty close. Now they are polar opposites.
In the year to June, the production data showed GDP fell 0.7 per cent. On the income data, it fell 0.3 per cent. Yet on the expenditure measure, GDP growth accelerated despite the recession to 2.9 per cent. And it is the average of these three that gives us the official figure of 0.6 per cent.
Something is very wrong, and there's an obvious suspect. The bureau reports that between December and June the value of our exports plunged 22 per cent. Yet it says exports actually grew, and the slump was due solely to a 24 per cent plunge in prices for everything we sell.
Sorry, I don't buy that. I predict it will be revised, and take the GDP down with it."
WHAT TO BELIEVE?
Growth in GDP stream, year to June at constant prices:
Growth in GDP stream, year to June at current prices:
Source: Bureau of Statistics. na = not available
Published in today's Age
Illustration: Nebraska State Education Association