There was no way that the 2018 GDP growth rate would not have been revised downwards. Whether the authorities accept it or not, statistics are statistics…
By Rattan Khushiram
The latest release of the National Accounts estimates has revised down its forecasts for GDP growth at market prices to 3.8%, lower than the 3.9% growth forecasted in September 2018. Gross Value Added at basic prices would grow by 3.6% instead of 3.7% as forecast in September 2018.
The 3.8% growth rate is supported mainly by household consumption demand growing by 3.4% and public sector investment rebounding with a substantial growth of 17.8%. Private investments have recovered in the last two years. They are expected to grow by 3.1% in 2018, lower than the 7.3% growth in 2017. The financial services, tourism and trade sectors show continued expansion, and the construction sector is on a strong positive uptrend with an expected 9.5% growth in 2018.
All the pro-government institutions — SBM, MCCI and BOM — had predicted a growth rate of 4% for 2018. They seem to be obfuscated that they were not on target. Are there not giving enough of arguments to those who are criticising them for not being independent? They seemed to be backing the so-called “Kitchen Cabinet” in its request to seek technical assistance from the IMF to review the methodology of the economic forecasts and to look into the compilation of data on the Global Business Companies (GBCs). They did the same thing in the case of the labour statistics when they saw that the employment growth figures were below expectations. They set up a committee to look into the workings of the labour figures. There still seems to be an issue with the labour statistics as the latest figures show a net creation of only 8,200 jobs created since 2015 compared to 25,000 in the previous period between 2011-2014. Here also technical assistance is being sought from the IMF. Why? Because the data does not match their expectations. Would this explain why some would want to make statistics lie?
Statistics Mauritius is known to produce our statistics according to the latest international standards and to classify the data in meaningful classes that enable comparability at the international level. A SWOT analysis carried out at Statistics Mauritius shows that its statistical outputs are of high quality. Mauritius graduated to the IMF’s Special Data Dissemination Standard (SDDS). We are the 70th country and the second Sub-Saharan country after South Africa to subscribe to the SDDS. Recently AFRITAC South has assisted Statistics Mauritius with the improvement of national accounts statistics, price statistics and a residential property price index.
The FSC has started collecting quarterly data on GBCs, which should enhance the coverage and quality of Balance of Payments (BOP), international investment position, and monetary and financial statistics (MFS). And changes to the Bank of Mauritius (BOM) and the Banking Act in 2016 extended the supervisory powers of the BOM to financial-holding companies and strengthened the collection of statistics for systemic risk monitoring.
As we can see, all the concerned institutions – Statistics Mauritius, BOM and FSC – are constantly being upgraded to acquire a certain standard in the collection of economic and financial statistical data which is timely, accessible, and reliable and recognised by international institutions. Thus, the apprehensions of the authorities are not justified. The problem is not with the data, the problem is with the expectations.
With a consumption growth rate of 3.4% powered by the introduction of the Negative Income Tax, the minimum Wage and the generous wage awards and compensations and public investments peaking at a growth of 17.8%, Government cannot understand how they are unable to crack the 4% GDP growth barrier.
In two of my recent articles published in these columns – ‘Chantiers failing to boost growth!!!, and ‘BOM: A rather optimistic growth forecast?’, I had tried to show that the low investment multiplier, the slowing down of exports growth, the investment rate stuck at around 18% of GDP (since private investments account for three quarters of total investments), and the shrinking net exports of goods and services, were plateauing or deflating the growth rate. There was the fact that the over-ambitious Public Sector Investment Programme forecasts for 2018 could not be realised given the weak absorptive capacity of the economy, the implementation delays and some unexpected ground realities.
And taking into account all these factors, there was no way that the 2018 GDP growth rate would not have been revised downwards. Whether the authorities accept it or not, statistics are statistics; however hard we try, we cannot make them lie.
* Published in print edition on 28 December 2018