HILARY JOFFE: Lies, damned lies, statistics — and 'complete nonsense'
How do we know what's really going on in the economy in an environment which has no precedent, one in which traditional methods of gathering statistical data often aren't feasible? As economists do these days, UBS Global Wealth chief economist Paul Donovan opened his remarks on the global economy with a lengthy but blunt disclaimer. "Nearly all the economic data we're getting is complete nonsense," he said on a webinar hosted by London-based One to One Children's Fund, whose work in SA is currently focused on getting personal protective equipment to health workers in the Eastern Cape.
Most of the data was survey-based and no sensible person fills in a survey in the midst of a pandemic, said Donovan. "We are seeing real problems with data quality at the moment; and our forecasts are hampered by the fact that we are really not sure where we are now."
Policymakers are having to make bold decisions on
The statistical community is in a fever globally and locally about the challenges of collecting information from people who are working at home, if they are working at all, on companies that may or may not still be operating, and goods that may be selling only online - or not at all. Economists have turned to more unconventional sources such as Google mobility and credit card data to try to establish what's going on as economies reopen. But much of it is guesswork, and forecasts are widely varied.
It matters enormously, and not just to stats nerds. Policymakers and businesses are having to make bold, real-time decisions that will profoundly affect how they emerge from the crisis. They have to do so based on data that's more often than not delayed and covered in health warnings, as it were.
In SA's case, one gets the feeling that without official statistics that paint a clear picture of the economic disaster, policymakers are not responding to the economic crisis with any huge urgency. There was only one mention of the economy in President Cyril Ramaphosa's Sunday evening address, and that was merely to explain why the government opted to tighten the rules as the infection rate spikes but not to reimpose a level 4 or level 5 lockdown. There was a loud silence on relief measures or an economic recovery strategy.
The Reserve Bank devoted two pages of this week's Quarterly Bulletin to the impact of Covid-19 on economic statistics. Its language is more measured and technical but it makes some of the same points Donovan does - and more. SA, with its hard lockdown and booze and cigarette bans, has faced particular challenges in surveying prices for inflation data, households for income and employment data and businesses for national accounts data. The Bank warns that official surveys will take time to pick up how many businesses have shut down and so risk overestimating economic activity.
The quality of the data is one issue. The timing is another. Though economists are using a range of "high frequency" surveys to try to estimate what's happening, official GDP statistics for the second quarter aren't due until September. And official unemployment statistics aren't due until late next month - so we won't know for a while whether they confirm the stark results of a countrywide survey published this week by 30 academics, which indicates 3-million jobs have already been lost.
The inability of SA's public purse to fund meaningful relief that would have saved jobs and kept businesses alive makes SA very different to the economies of Europe and the US, where, as Donovan points out, government schemes ensured most workers could maintain their incomes while companies survived. But he cautioned that economies will not return to 2019 levels of GDP until the end of 2021 at the earliest - and urged governments to start building the economy of the 2020s now, rather than trying to save the economy of the 1990s. In SA, it's not clear our policymakers are focused on doing either.
• Joffe is contributing editor.
Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.