The Num­bers Game

An­a­lysts have ques­tioned the ac­cu­racy of Sri Lanka’s glow­ing growth fig­ures, deem­ing them slightly in­flated.

Southasia - - CONTENTS - By Maria Ka­mal The con­trib­u­tor is a teacher, writer and re­searcher. She is a Dag Ham­marskjold fel­low and Ful­bright alum­nus.

An­a­lysts have ques­tioned the ac­cu­racy of Sri Lanka’s glow­ing growth fig­ures.

The World Bank in its Global Eco­nomic Prospects re­port of June 2011 com­mended Sri Lanka's post-war eco­nomic re­cov­ery. The re­port also pre­dicted that Sri Lanka and In­dia would be at the fore­front of growth in South Asia.

Only a few years af­ter a long­drawn war came to its con­clu­sion, the Sri Lankan econ­omy reg­is­tered an an­nual growth of 6.4 per­cent from 2003 to 2012.

If of­fi­cial sta­tis­tics are to be be­lieved, Sri Lanka has been liv­ing up to its glow­ing rep­u­ta­tion. The coun­try’s Cen­sus and Sta­tis­tics Depart­ment an­nounced in its re­port a phenom­e­nal Gross Do­mes­tic Prod­uct (GDP) growth of 7.3 per­cent in 2013, and placed eco­nomic growth at 8.2 per­cent in the fi­nal quar­ter of the year.

Ac­cord­ing to the de­tails of this re­port, the in­dus­trial sec­tor reg­is­tered a 9.9 per­cent year-on-year in­crease, fol­lowed by the ser­vices sec­tor with a 6.4 per­cent rise.

That is not all, though. The agri­cul­ture sec­tor grew at a rate of 4.7 per­cent. Mean­while, in the ser­vices sec­tor, tourism flour­ished and the hos­pi­tal­ity in­dus­try grew by 22.3 per­cent. Fur­ther­more, the port and telecom­mu­ni­ca­tions sec­tor marked a growth of 11.4 per­cent.

Why is there so much in­ter­est in GDP and why should we care? Sim­ply put, GDP is the mar­ket value of all of­fi­cially rec­og­nized goods and ser­vices pro­duced in a coun­try in a year. The GDP per capita in­di­cates a coun­try's stan­dard of liv­ing. Sig­nif­i­cantly, the GDP per capita is not a mea­sure of per­sonal in­come. In­stead, it ex­actly equals the Gross Do­mes­tic In­come ( GDI) per capita. How­ever, GDP is re­lated to na­tional ac­counts.

Damp­en­ing the cel­e­bra­tory mood in Sri Lanka are ac­cu­sa­tions of ‘num­ber fudges’ lev­eled against the depart­ment of Cen­sus and Sta­tis­tics. An­a­lysts and leading Sri Lankan pub­li­ca­tions have ques­tioned the ac­cu­racy of these glow­ing fig­ures and deemed them at least slightly in­flated.

Speak­ing at a me­dia con­fer­ence

in Colombo, Deputy Gover­nor, Cen­tral Bank, Dr. Nan­dalal Weeras­inghe rub­bished charges of data ma­nip­u­la­tion. He ar­gued that in­flat­ing fig­ures is no small task as the num­bers are linked with the data of var­i­ous other sec­tors. Tam­per­ing with fig­ures will in­evitably re­flect it­self the next year, he rea­soned.

The Sri Lankan press re­ported that the Cen­sus and Sta­tis­tics Depart­ment Di­rec­tor Gen­eral, DCA Gu­nawar­dena also de­nied al­le­ga­tions of mis­re­port­ing the GDP. He de­fended the process through which data is col­lected, cit­ing re­liance on sci­en­tif­i­cally de­signed sur­veys, cen­sus, spe­cial stud­ies and ad­min­is­tra­tive records.

Even so, an of­fi­cial in-charge of GDP com­pu­ta­tion of the Cen­sus and Sta­tis­tics Depart­ment ap­pears to have been selected to take the fall. Gu­nawar­dena clar­i­fied that the said of­fi­cial failed to com­ply with the depart­ment’s reg­u­la­tions while per­form­ing his du­ties. The of­fi­cer has since been trans­ferred and pe­nal­ized for his mis­take. Gu­nawar­dena nonethe­less de­fended the depart­ment’s prac­tices and the re­li­a­bil­ity of its meth­ods. "Our Depart­ment and of­fi­cers play by the rules and do not have any hid­den agenda. Hence, the data re­leased is not in­flated or ma­nip­u­lated as claimed by op­po­si­tion politi­cians in­clud­ing JVP Par­lia­men­tar­ian Anura Ku­mara Dis­sanayake," he said.

"All the cal­cu­la­tion pro­cesses are done and fig­ures are com­puted in ac­cor­dance with in­ter­na­tional cri­te­ria and UN man­u­als. Com­pu­ta­tion of sta­tis­tics is car­ried out in ac­cor­dance with the rel­e­vant rec­om­men­da­tions of the United Na­tions, World Bank, IMF and sev­eral other in­ter­na­tional agencies,” Gu­nawar­dena said.

But the IMF also ap­pears to have ex­pressed its con­cerns about the cal­cu­la­tion process. In a re­port re­leased last year, the IMF made clear that there is room for im­prove­ment in Sri Lanka’s GDP cal­cu­la­tions and that the coun­try does not yet com­ply with the high­est data dis­sem­i­na­tion stan­dards.

"The na­tional ac­counts suf­fer from in­suf­fi­cient data sources and un­de­vel­oped sta­tis­ti­cal tech­niques," an IMF coun­try re­port said. "The coun­try does not have pe­ri­odic com­pre­hen­sive bench­marks or a sys­tem of reg­u­lar an­nual sur­veys of es­tab­lish­ments. A sta­tis­ti­cal busi­ness reg­is­ter, which would serve as the main ba­sis for con­duct­ing sam­ple sur­veys, is not avail­able. As a re­sult, the few sur­veys that are con­ducted do not have good sam­ple frames."

The re­port fur­ther said that es­ti­mates of gross value added are pre­pared by di­rectly re­ly­ing on out­dated fixed ra­tios es­tab­lished from the base year 1996, of­ten with out­dated stud­ies or ad­hoc as­sump­tions. More­over, the re­port de­clared the method­ol­ogy for de­riv­ing GDP at con­stant prices as un­sat­is­fac­tory.

The IMF said fis­cal sta­tis­tics could also be im­proved and there would be tech­ni­cal mis­sions in 2013 and 2014 to help in this re­gard.

In Sri Lanka’s de­fense, it has to be said that an­a­lysts ac­cept that most coun­tries are guilty of tin­ker­ing with data. In fact, de­vel­oped coun­tries of­ten use in­cred­i­bly so­phis­ti­cated math­e­mat­i­cal meth­ods to un­der­state in­fla­tion.

Eco­nomic com­men­ta­tor, Kevin Phillips has ad­dressed data ma­nip­u­la­tion in the United States. He went so far as to say that the coun­try is liv­ing on "bor­rowed pros­per­ity."

In a re­cent re­port on the South Asian re­gion, the World Bank projects that Sri Lanka would con­tinue to grow at 7.3 per­cent this year, thanks to in­fra­struc­ture in­vest­ments and post­con­flict re­build­ing.

Sri Lanka has taken def­i­nite strides for­ward and its progress is not just all hype. There is good rea­son to be­lieve that the coun­try has out­per­formed other South Asian coun­tries when it comes to its suc­cess in pur­su­ing the Mil­len­nium De­vel­op­ment Goals. Ac­cord­ing to the World Bank, Sri Lanka has met the MDG tar­get of halv­ing ex­treme poverty. The coun­try is said to be on track to meet­ing most of the other MDGs as well.

How­ever, over­all in­di­ca­tors for South Asia re­main wor­ri­some. A World Bank re­port pre­sents grim sta­tis­tics that un­der­line an in­fra­struc­ture gap in the re­gion. What this means in ef­fect is that a large mass of hu­man­ity in this part of the world does not have ac­cess to ba­sic in­fra­struc­ture in­clud­ing roads, toi­lets, elec­tric­ity, clean wa­ter and tele­com.

The re­port fur­ther says that 41 per­cent of South Asia's pop­u­la­tion defe­cates in the open while 75 per­cent does not have ac­cess to piped wa­ter. The re­port con­cludes that South Asia needs to in­vest up to $2.5 tril­lion to bridge its in­fra­struc­ture gap over the next decade.

The con­tro­versy sur­round­ing Sri Lanka’s GDP isn’t just a mat­ter of num­bers; it high­lights a lack of trans­parency and cred­i­bil­ity when it comes to of­fi­cial data – a type of dis­trust that ex­ists all over the world and says more about gov­er­nance than it does about eco­nomic growth.

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