Data Problems Everywhere

This is from the Economist:

GOVERNMENT statisticians shun the limelight, which only ever finds them when things go awry. So it is with India’s national bean counters, who are struggling to convince the world that an economy with idle factories, sagging exports and ailing banks grew by 7.5% in 2015, as their models purport to show. Ever since a new methodology for calculating GDP was adopted last year, India has appeared to be the world’s fastest-growing big economy, outpacing China. But scepticism about the data is growing even faster.

… Investors, at any rate, roundly disbelieve India’s growth figures. Nevsky Capital, a hedge fund, cited dodgy data from India, among other places, as a reason to shut up shop at the start of the year. Even the government’s own chief economic adviser has admitted he is sometimes flummoxed by the data. A cottage industry has sprung up to cater to the sceptics, blending various indicators of economic activity to produce new gauges of growth.

Such home-brewed statistics have been common in China for some time: Li Keqiang, now the country’s premier, admitted as a provincial governor that he all but ignored “man-made” economic statistics in favour of hard-to-fiddle data such as railway-cargo volumes, electricity consumption and loans made by banks. The Economist began publishing a “Keqiang Index” when his habits became known in 2010.

Ambit Capital, a broker based in Mumbai, now computes its own “Keqiang Index” for India, which implies a real growth rate of 5.4%. Economists at HSBC, a bank, think 5.9-6% is closer to the truth.

More on this here.