Here is a good example of propaganda, of what I call the “boiling room” syndrom : misinterpretations of datas, false extrapolations, mix of comparisons in percentages and values and mix of periods… in order to “spin”, to “boil” the economic situation.
At least, its apparences. Its face, as a thai would rather say.
For the demonstration, I will take an article published today by Nation, based on a report of the Fiscal Policy Office.
Ready ? Fasten your seatbelt.
First, the baseline (the mantra) : “Consumption is recovering, as revealed by several indicators.”
Sir, yes sir.
” According to the monthly economic report, collection of value-added tax in real terms expanded by 3.1 per cent year on year compared with 0.7-per-cent growth in the previous quarter.”
Totally idiotic. Base effect. Q3 2006 was really bad. So naturally, Q3 2007 looks better, year on year in percentage.
But actually, if we look at the amounts, in value : Q2 of this year = 109,94 billions THB. And Q3 = 109,96 billion. Now, that’s an impressive hike…
Furthermore, imports also count for VAT revenues. Exports and imports in august and september were strong, so it’s normal that VAT is going up (keep in mind that a lot of exports use imported parts and materials).
VAT is not automatically a sign of private consumption.
“Sales of cars also increased by 2.3 per cent year on year, compared with a sales drop in the three previous consecutive quarters. Car sales in September, however, dropped by 2.1 per cent.“
Base effect again, Q3 last year was bad. If we look the figures : Q3 2006 = 44 676 cars. Q4 = 52 602 cars. Q1 2007= 37 522. Q2 = 45 567. Q3 = 45 700. So, 150 cars more than Q2… Nice score. Nice trend.
And another blow : they tell us that the negative trend is back in september…
“Sales of motorcycles still faced a decline of 23.2 per cent, following a sales contraction for four consecutive quarters. This indicated that consumption is recovering in bigger cities but remains weak in rural areas.“
Amazing statement ! A staggering proof of recovery indeed : a sharp drop in motobikes sales. But the spin doctors have an answer for everything : the situation is “better” in Bangkok, where… obviously houselholds have more money to spend.
It’s like to say : “the recovery is here, because the rich people can buy…more“.
“Imports of consumer goods in terms of volume rose by 17.6 per cent, compared with a growth rate of 17.5 per cent in the second quarter.“
Amazing recovery. From 17,5 to… 17,6 %. Absurd.
By the way you will notice : no year on year comparison anymore.
“The Consumer Confidence Index in the third quarter was 69.7, suggesting confidence remained weak.”
And the final blow, like the “bouquet final” of a fireworks : consumption is “recovering“. But consumer confidence “remains weak”.
Indeed (read here).
See you in Q4 folks. With oil, inflation on fire, and the so called “miracle elections” of december, exports under threat (low USD and lower demand in the US and Japan). it’s going to be jumpy…
You’ll find here, all my charts (some of them cover GDP, private consumption, sales of cars etc.).