Debunking FT-Alphaville post on Spanish Statistics.

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It is not surprising that given the lack of Management of our Government, that has made of our country a kind of protectorate of Brussels, a pirate e-mail ran out as a firing powder and our Statistics ended questioned. Perhaps the worst has been the explanation of the INE (National Institute of Statistics) saying that the e-mail adds apples and pears when what the post just did was to check if INE data fits with other activity indicators. Let see if we can solve the mess, because the reality is quite different and there is no fall of 17% of GDP in 2009.

GDP is calculated as follows:

GDP = Private Consumption + Investment + Public spending + Trade Balance

During 2.009, according to INE, these are the data:

a)     Private Consumption falls 4.3%; Investment falls 16% (rare data); Public Spending grows 3.2%.

b)    In the case of Investment, Housing falls 24.5%; rest of Construction, that includes Public Expending in Infrastructure, etc. falls 0.1%; and finally, Machinery and Equipment that falls 21.4%.

c)     Imports have fallen 17.8% and Exports 11.6%

d)    As a result, and considering the weight of every component in the GDP the Internal Demand of the Spanish Economy has fallen 6.4%, but you have to add to this the contribution of the Trade Balance to GDP growth rate, that was positive by 2.7% of GDP, and then you have the -3.7% growth of GDP given by the Government.   

Where are the tricks?

                First of all, the data from 2007-2008 are preliminary, while 2.009 is an advance.  The most solid data in the hands of the INE are those from Customs that add growth, among the other data some may be estimated with models that do not consider extraordinary events as a Credit Crunch or a Housing Bubble Bust. In fact, previous data was -3.6% and when they revised it they got a worse data. Is there a Controversy on the Methodology? Yes, in USA we have the case of Hardware and Software estimations for GDP. Yes, we all must be alert with politicians.

Is it wrong to check official data with other indicators?

No, if is just checking. For instance, I like Money to GDP (that you can see clicking here) but to focus in indicators mainly affected by points a) and b) and forgetting d) as the e-mail did  and then talking of serious fraud is wrong. A fall in GDP of 17% in 2.009 is crazy; perhaps 10% after five years of adjustment, but not 17% in one year. 

I hope it may clear this matter.

Luis Riestra Delgado.


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