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.
They look at Spain’s services sector, specifically two statistics, the Market Services Gross Value Added (GVA) and the Indicator of Activity in the Service Sector (IASS/SSAI). Both of these are published by Spain’s official stats body, the Instituto Nacional de Estadística (INE):
Superposing the Market Services Gross Value Added (GVA) with the IASS we see that there’s a very high correlation since the start of the series (2002) until the fourth quarter of 2007, when the curves start to diverge.
In France, the equivalent indicator to the IASS, Évolution de la production des services marchands (prepared following the same methodology), fell only by 1.2% in the two years, while the Market Services GVA (this is, excluding government, health, education and social services) remained stagnant. Thus, a not very relevant discrepancy between both series in France, while in Spain the observed fall in the IASS was a hefty 21%, at the same time, that enigmatically the Market Services GVA increased by 4.5%. We should realize that the GVA of Market Services are 50% of GDP.
Essentially, the IASS should be seen more like a short-term business statistic, such as the PMI, for example –with the key components being turnover and employment The GVA, meanwhile, is the way demand side GDP is measured.
You could say, one measures how many apples some people sell according to a survey, while the other measures how many apples people buy via VAT returns. The incongruity comes in why they tracked so well before, but no longer do.
Another discrepancy appears in construction, the author(s) says:
Lets make the same calculations with the c onstruction output published by Eurostat. The curves don’t fit as tightly in this case, due to the use as deflator for Construction GVA the same number as used for Real Estate Services, which led to a overvaluation of Construction GVA until 2007 ( when construction prices stopped growing faster than in other sectors).
Returning to France, the construction index fell by 12.7% in the two years, while Construction GVA deflated fell by 7%. In Spain the construction index collapsed by 29.4% in the same period, while Construction GVA only fell by 16.7% …
And finally, industry:
Lastly we arrive to the IPI (industrial production index), prepared by Eurostat. Correlation between this indicator and Industry GVA was very good until the start of the recession, when a greater fall in IPI that in Industry GVA (deflated by CPI), was observed, though discrepancies are much lesser in this case.
Industry fell by 24.1% in the two years, as shown by the IPI, while Industry GVA (deflated) fell by 16.7%. In France industry suffered a fall of 16%, while Industry GVA (deflated) fell by 14.5%. As seen, and in comparison to France, we see discrepancies of 5 points…
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.
While we’re still waiting to speak to their economists — since they too were on austerity strike on Wednesday — the initial response of the press office thus far is, that the discrepancies could be due to differences in the way the two data sets are compiled. For example, seasonal adjustments and the use of constant or current currencies.
They also add that the IASS data only looks at private industry, while GVA figures include the public sector. Furthermore, the GVA figures also depend, to a greater degree, on estimates — since they have to account for such things as the grey economy, for example.
But even accounting for the above, economists we at FT Alphaville have spoken with suggest the divergences remain curious.
The greatest of these looks to be in services, especially considering that the sector accounts for some 50 per cent of Spanish GDP. We’ve had a look at the IASS and Market Services GVA and they seem to line up with those in the anonymous tip-off.
Below is a rough chart — using the current prices GDP component:
Raw GVA and services data are here and here, if anyone wants to take a look, and we welcome any thoughts in the comments section below.
More too, as we get it.
By Tracy Alloway and Izabella Kaminska
This entry was posted by FT Alphaville on Thursday, September 30th, 2010 at 9:30 and is filed under Capital markets. Tagged with gdp, Spain, statistics, unemployment.
¿Por qué será que no me resulta nuevo esto? Ya más veces se ha hablado del tema en este foro, e incluso la cifra más o menos está en línea con lo que aquí se ha barajado. El tema es delicado porque reconocerlo (Grecia calculo que debería deflactar no menos del 35% su absurdo dato-PIB) supondría ponernos a los pies de los caballos por cuanto los cocientes deuda-PIB se dispararían alarmantemente y sería visible que realmente la deuda tanto privada como pública de los españoles es elevadísima.
Parte del argumento para "crujir vivos" a los griegos era que su gobierno había maquillado/ocultado las verdaderas cifras de su economía... y aqui rápidamente salieron los capitostes aborígenes diciendo que españa no era Grecia porque no habíamos falseado datos como ellos...inocho: bueno, aqui lo teneis...:ouch: