Forecast accuracy

Stephen Koukoulas relates a great anecdote:

When I was working in Treasury a few years ago, a colleague told the story of his official visit to China. He was speaking to his Chinese counterpart in the economic forecasting section and was marvelling at the accuracy of the economic forecasts of the Chinese government. He said to his Chinese friend, “your forecasts are remarkably accurate. For GDP and inflation you are never out by more than 0.1 or 0.2 percentage points. Quite often, you are spot on. How do you do it?”

Without an overt hint of discomfort or irony, the Chinese economist answered: “John – not only do we make the forecasts, but we also compile the data.”

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9 Responses to Forecast accuracy

  1. Keith

    I remember attending a lecture about the SNA at the ABS in the eighties. Someone in the audience questioned the presenter about how Japan kept recording such great GDP numbers at the time. Presenter’s answer : “Oh that’s simple – they cheat.”

  2. Poor Old Rafe

    The ethos of disinterested (non political) public service administration is so dead and buried that the stats of western nations may in some (especially politically sensitive areas like hospital waiting times) be little better than those of the Third World.

    Quite apart from the data collections that were deliberately set up to facilitiate Keynesian management and cognate government meddling.

  3. entropy

    They certainly do compile the data, and my god they do it efficiently. The Chinese manage to produce their figures within a couple of weeks of the end of the last quarter, while slack old ABS almost takes to the end of the current quarter. Maybe the ABS could learn a few things about productivity the Chinese.

  4. Jessie

    Spot on.
    I thought that was reporting against KPIs (Key Performance Indicators), concocted to a never ending non-output and non-outcome.

    Poor Old Rafe, I do not agree with your comment. Perhaps the ‘interested’ were deadened, buried or ousted by the general sub-standard performance and unionised workforce. John Stone, Des Moore etc would find your comment insulting, as some others I expect also would.

  5. Samuel J

    Entropy – not as efficient as the USSR. It compiled the official statistics of the previous quarter in advance.

  6. Rafe

    Jessie why are you arguing with me? My comment is partly based on John Stone’s account of the decline of the commonwealth public service which be was well placed to observe some years ago. Both Stone and Moore left the service long ago for the reason you cited yourself.

  7. Lazlo

    Does it matter whether or not government economic statistics are accurate? Discuss.

  8. Are you sure the traveler was called John and not Ken?

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