GDP Q2 : chart and light on a little makeup from the government

Here is an update of the chart about GDP, after the publication of the datas for Q2 (read here).

Some revisions have been made on the datas for Q1.

The growth rate (compared to the same quarter previous year) : 6,1% instead of 6 %.

The deflator was revised down, from an already surreal 4 % to… 3,7 % !

(by the way I was right to say that the low deflator on Q1 was a “statistical glitch“. On Q2 it starts to go up again).

Read here to understand the concept of deflator.

I remind you that the % of growth, year on year, is given on the basis of the “real GDP” (= GDP at constant prices), not the “nominal” GDP (at current prices).

My point is :

the “nominal” GPD was REVISED DOWN (from 2 297 billions THB to 2 291 billions THB)

but the “real” GDP was REVISED UP, therefore the % growth was revised up from 6 to 6,1 %

So instead of having a slightly lower % of growth, we are getting a slightly higher figure. You’re confused ?

It’s simple. It’s because the deflator was revised down.

I remind you the rule : the lower the deflator is, the higher the “real” GDP will be, therefore the higher the growth year on year will be.

3 Responses to “GDP Q2 : chart and light on a little makeup from the government”

  1. 1 Gloomy Observer 27 August 2008 at 4:53 am

    Well, to be fair the US is even worse in this regard: it’s GDP deflator for Q1 and Q2 this year was hilarious when compared with (already fiddled-with) CPI….but the US figure measures domestic inflation not imported (i.e., energy costs) so this does make some slight sense – I guess the Thai statisticians are following this lead…

  2. 2 ThaiCrisis 27 August 2008 at 5:10 am

    Oh yes, I don’t say that those little “make up sessions” are a thai exclusivity. Far from it… actually, the US are probably the biggest cheaters (with China).

    I think that since mid 2005 a huge propaganda machine is at work in the US to “postpone” the pain, as far as possible. Until the elections.

    I mean to hear the FED (ah ah ah ah) talking about… raising rates… and many officials and journalists commenting on the issue… is just surreal.

    I can’t list all the inane news we receive from our american friends… that would be too long. But it gives vertigo.

    Credit market, banks, real estate… It’s a festival.

  3. 3 ThaiCrisis 7 September 2008 at 3:52 pm

    Read this about deflator and GDP growth in the US.

    In its report, the Commerce Department stunned economy watchers by showing a 3.3% annualized increase in 2nd Quarter GDP.

    The robust growth apparently wrong-footed those expecting further recessionary signals, lent further strength to the current dollar rally, and encouraged previously cautious investors to take another look at U.S. stocks.

    The strong number also bolstered claims by the Bush administration and the McCain campaign that a recession is primarily a psychological phenomenon. These conclusions would be at least quasi-logical if they were not based on a complete misreading of the report.

    Without raising an eyebrow on Wall Street or in the press, the GDP deflator, used in the report to downwardly adjust GDP to account for inflation, was shown at just 1.2% annualized…. the lowest deflator in ten years.

    In other words, to arrive at a 3.3% growth rate, the government assumed that inflation is running at a ten-year low!

    In contrast, the latest reading on consumer prices (CPI) in the second quarter shows year-on-year inflation running at a 5.6% rate, a seventeen-year high! In fact, for the second quarter, the same time period measured by the GDP deflator, prices actually rose at an even faster pace of 8.0% annualized.

    How can it be that inflation is simultaneously running at a seventeen-year high and a ten-year low? Welcome to the Alice in Wonderland world of government statistics.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.

%d bloggers like this: