Posts Tagged ‘gdp’

China’s GDP growth slows to 7.5%? Or less?

July 24, 2013 Leave a comment


The number 7.5% is right in line with the target…and Mamta Babkar thinks that’s too good to be true.


But I doubt the real numbers are much different from the official figures. Here’s why: with reporting like this, you can only fudge the numbers for so long.

A hypothetical example:

Suppose you are an official reporting economic growth for XYZ Province in China. Let’s make it a reasonably large province…say, one with a big economy of around $815 billion.

Now suppose the economy really only grows by 6.5% to $868 billion. But you want to fudge the numbers and report growth of 7.5%, or a $876 billion economy. The actual/reported gap is $8 billion, not even noticeable in an economy of this size.

What happens next year? Suppose the target is again 7.5% but again you only get 6.5% growth. This time, you have to report a $942 billion economy, when the real size is only $924 billion. Now the actual/reported gap is $17 billion–twice as big relative to the actual economy size as the year before.

By the fifth year the gap would be  $53 billion, or five times as big relative to the first year “fudge.” 

In other words, since these numbers are compounding annually, you can’t just roll fake numbers forward. They snowball.

China’s political leaders may or may not be less honest with numbers than politicians of other countries–who’s to say?–but they certainly understand math better than the average journalist.

My guess is that the numbers are pretty close to correct, even if they’ve been “smoothed” a little.


US GDP for 2012

March 4, 2013 Leave a comment

The latest, updated GDP figures for 2012 for the United States are here.

For my Global Marketing and Management students, try to make some sense of the announcement. It’s written differently than what you’ll read on a news site (Yahoo, Reuters, NYT).

It’s important to learn how to interpret information like this from a source that’s upstream from the news. Once you’ve tried to understand it, compare your understanding to this article.

Ask yourself: why did the journalist highlight certain parts of the report, and not others? Could the “story” of this data told differently? Contrast with this article, which is based on the same data.

Is China Adding or Subtracting to World GDP Growth?

January 16, 2013 1 comment


Derek Scissors makes an interesting but somewhat contradictory point:

There’s this:

The key is the idea of “contribution.” This sounds like China is helping the rest of the world grow faster. In fact, if we are talking about gross domestic product (GDP), China is only helping itself grow faster. It’s reducing everyone else’s GDP.

And later, this:

GDP certainly understates China’s economic contribution to the world

Both are correct.

How can that be? Students, I would like to hear your analysis!

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