Take physic, pomp

Ridicule for Peru’s economic numbers is getting louder

Up to recent times, criticism for the methods and results that attempt to substantiate Peru’s economic miracle has been confined to a small group of hardcore economists, but now that’s changing. The mainstream of Peruvian economists and even the most officialist and supine of its media outlets are voicing open and loud criticism at the way the figures are calculated and the obvious (really, truly obvious) inflation of results.

All the normal anti-Alan outlets have been pounding on this for a while, of course, but this report in El Comercio marks a turning of the tide. For those unaware, El Comercio is by nature supportive of the government (including Presidents from Fujimori, through Paniagua, Toledo and Twobreakfasts) but has a particular soft spot for the APRA party as they tend to favour the newspaper’s owners with juicy construction contacts and other “legal” favours.

So when El Comercio reports on the stench rising from Peru’s statistics office and the numbers massaged to an inch of their life, watch out. In the report El Comercio has a whole group of local names lined up and voicing their doubts, including site friend Jurgen Schuldt (who is, after all, a highly respected economist at the Universidad del Pacifico in Lima), Bruno Seminario (ditto very respected, ditto Pacifico) Kurt Burneo (ex head of the Banco Nacion, no less), Eduardo Morón, José Marthans and other names you’ll not have heard of unless you care about the intellectual society in Lima.

On his blog this week, Schuldt really sums up the whole problem in one neat paragraph. Not a man to go for the hyperbole, he notes that the March GDP headline number is +3.05% and is left scratching his head when looking at the numbers that compose that growth:

“..It becomes difficult to understand how the “other services” sector could have grown 7% (that explains 86% of the total growth!) at the same time that there were abrupt falls in industrial manufacturing (-5.4%) and tax revenues for April (-18%) as mentioned by Farid Matuk and Bruno seminario amongst others questioning the amateur surgery being practiced in the INEI.”

Exactly. That the sector “other services” is calculated in a totally secretive and non-transparent black box manner also screams manipulation, too. Put in very basic terms, all of the INEI figures that are collected in a public and verifiable way point to the same thing: Peru is in recession. But somehow, mysteriously, the Wizzrd of Ozness that goes on at the INEI means that these clear negative numbers are counterweighted by figures for other, non survey measurements that say “no, everything’s ok..seriously…look at this number.”

It’s bull. Chile is in recession to the tune of 2.1%, as announced today. Chile is a strong country financially that relies very heavily on exports of metals to grow. Peru’s export mix is uncannily similar to that of Chile but wants us to believe that it’s growing 5% more than its Southern neighbour even though its financial system is weaker and political stability far more precarious. And it bases its argument on a set of cooked up black box numbers. It’s ridiculous indeed, it’s asinine, it’s an insult to the intelligence. Three adjectives that can also be used to describe Peru’s President, as after all that “get what they deserve” phrase works just as well down here.

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