How to boost GDP stats by 60%

Written by admin   // December 10, 2012   // 0 Comments

In 2010 Ghana announced a 60% increase in GDP estimates and Nigeria may soon follow suit. But how can the economies of these African countries seemingly grow overnight?

by Laura Gray BBC New

The answer is in the maths.

To calculate GDP in countries where data is sparse like Ghana or Nigeria, government agencies select a “base year” – a year when unusually good data on the economy is available. They then add on the extra data they collect each year to get a rough idea of economic growth.

In 2010 Ghana changed its base year from 1993 to 2006, and this led to a jump in GDP and the conclusion that, in previous estimates, about $13bn (£8bn) of economic activity had been missed. As a result, Ghana was upgraded from a low-income to a lower-middle-income country.

Nigeria is widely expected to announce a change in its base year from 1990 to 2008, although it won’t be clear until the calculations are done what exactly this will do to GDP figures.

The answer is in the maths.

To calculate GDP in countries where data is sparse like Ghana or Nigeria, government agencies select a “base year” – a year when unusually good data on the economy is available. They then add on the extra data they collect each year to get a rough idea of economic growth.

In 2010 Ghana changed its base year from 1993 to 2006, and this led to a jump in GDP and the conclusion that, in previous estimates, about $13bn (£8bn) of economic activity had been missed. As a result, Ghana was upgraded from a low-income to a lower-middle-income country.

Nigeria is widely expected to announce a change in its base year from 1990 to 2008, although it won’t be clear until the calculations are done what exactly this will do to GDP figures.

 

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