Peru first quarter GDP growth +1.8%

Oh really?

Yesterday the politically motivated liars at Peru's INEI statistics office came out with their GDP fabrication for the first quarter of this year. The +1.8% is a full 3.3% higher than the number that would have popped out before the "improvement" in methodology that was secretly brought in by Twobreakfasts in 2007 and is still a black box. Local economist and all-round good egg Bruno Seminario is now tracking the numbers using the old method and has Peru's GDP at -1.5% for the quarter. Plenty of other commentators that know the real story are lining up to cast serious doubt on the INEI figures, too. But in the end plain common sense says that Peru isn't growing this year. No numbers needed.

The true number is probably somewhere between the two figures. On the one hand there is reason to credit things like internet commerce and a more active banking system in a revised method. But on the other hand, as Seminario rightly points out, "An economy that grows via the service sector is always suspicious."

That Twobreakfasts is manipulating the figures is undeniable for all expect his most ardent fans (and with a 29% approval rating there aren't many of them around). The only question is "by how much?".

Peru's false GDP: no more crazy pills for Otto

Wow, to actually, finally read a report in the English language about the growing scandal around Peru's heavily massaged GDP numbers is incredibly refreshing, dudettes and dudes. There's now a small glimpse of sanity at the end of a long, dark tunnel. Check out the Reuters report below.

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Doubts grow about accuracy of Peru GDP numbers

LIMA, May 22 (Reuters) - Official statistics on economic growth in Peru may be too optimistic and painting a picture showing economic expansion when in fact the Andean country is in a recession, two Peruvian academics said.

Peru's statistics agency, the INEI, started working with a new methodology for calculating gross domestic product in 2007, and its results sharply diverge from the previous model.

Bruno Seminario, an economics professor at the Universidad del Pacifico in Lima who has taken current data and run them threw the old model, says Peru's economy is in fact shrinking at a time when President Alan Garcia says his country is largely sidestepping fallout from the global downturn.

"This change (to a new methodology) has generated so many distortions that nobody knows what's going on," Seminario told Reuters in an interview on Friday.

INEI director Renan Quispe, who declined to comment for this article but in the past has insisted he has "improved" the method for calculating GDP, has measured growth at 3.14 percent in January, 0.19 percent in February, and 3.05 percent in March using his new methodology.

But Seminario said that when the INEI's previous model is used, the numbers look much worse and show economic contraction of 0.51 percent, 1.38 percent, and 1.71 percent in each of the first three months of this year.

He said Peru is suffering a recession similar to the one it fell into after the 1997-8 Asian financial crisis, and that Peru's economy has ground to a halt after surging nearly 10 percent each of the last two years on a boom in commodities prices.

Seminario said the results produced by the new methodology the INEI is using are counterintuitive at a time when other indicators and countries that rely on commodities exports are suffering sharper declines.

The current slowdown has caused critics to take a closer look at official GDP numbers.

Economists also complain that the new methodology is a bit of a black box, wasn't subjected to a public comment period by independent statisticians before being introduced, and that the official results suggest a series of flimsy assumptions were put into the new model.

"Nobody's seen the survey or the deflators," Seminario said. "The only sensible thing to do is for the INEI to publish both series of numbers."

He isn't the only critic.

Farid Matuk, the former head of the INEI who was fired from his job after Garcia took office, has also written that he thinks the numbers are inflated.

He has even gone so far to say that the government has filed several lawsuits against him in retaliation for criticizing the GDP numbers.

Garcia's chief of staff, Yehude Simon, denied that the lawsuits were politically motivated, local radio reported on Friday.

Critics say the INEI is being imprudent by deriving some key numbers from estimates, instead of actual surveys.

Still other critics have compared Garcia's administration to the Kirchner governments in Argentina, which private economists have criticized for manipulating official statistics for political ends.

"The strategy to alter part of the measurement of GDP is misguided because the sectors 'other services,' commerce, construction, among others, are measured between the four walls of the INEI," Matuk has said.

Peru's GDP: Solid proof of the Peru government's lies

If proof were needed that Peru's GDP figures showing "growth" in 2009 are fabricated beyond measure, then that proof arrived tonight.

Bruno Seminario, leading economist at the UP Universidad Pacifico, has just published this report that shows just how much of a sham the Twobreakfasts government's GDP figures really are. You'll remember that since Twobreakfasts took power the INEI stats office quietly and without any warning, the INEI stats office changed bosses (to an APRA friendly guy) and changed the methodology of GDP calculation. Much of the heavy criticism in recent weeks has been about this change (see this to find out details) because much of the calculation is now done in an uncheckable, black box style that is easily manipulated for political ends (and by all accounts, successfully done, too). So what Seminario has done is to take the raw data and apply the old methodology, i.e. that used in the governments previous to Twobreakfasts, and see how things pan out.

The change is massive, and here's the chart.


Instead of the 3.05% growth rate recorded by the present dubious method, March 2009 comes in at -1.73%, a stunning turnararound of 4.78%. In fact, according to the old method, Peru has been in recession for the whole of 2009. It now becomes clear why this bunch of liars wanted to change the method and also said nothing for three years about the changes. The difference between the two methodologies is just too great to dismiss and must raise serious, nay fatal, questions about the way the data is being collated, calculated and disseminated at present.

The discredited economic policies of Twobreakfasts, Carranza et al cannot be hidden behind a bunch of falsified numbers. The road being taken right now by Peru is the same road taken by Argentina in 2007 when Kirchner decided to change the bosses at INDEC to get himself a bunch of new and better macro numbers. Soon enough, inside the country incredulity turned to anger and anger to laughter, but the world outside Argentina simply turned its back on the country as an invetsment vehicle. This is the chronic damage that is caused by cooking the macroeconomic books.