So the last recession was not so bad after all
As the world economy hovers close to another growth crisis, European statisticians have quietly admitted that the last recession was not quite as bad as they made us believe.
The European Commission’s statistical agency has just released revised economic growth figures for the period 1997-2013 – see here
Whilst they try to play down the overall impact of the changes, the detailed country data for recent years makes much more dramatic reading. Due to new ways that the capitalization of research and development is treated in the figures and various statistical improvements, the collapse of the economies of Cyprus and Netherlands in 2010 now appear to have been severely overblown. The new figures raise the 2010 GDP figures by 9.5% for Cyprus and 7.6% for the Netherlands.
Other countries affected by these changes are Sweden (+5.5%), Finland (+4.7%) and the Czech Republic (+4.3%). In all other EU countries except Latvia the changes had a positive effect upon GDP.
Commenting on these revisions today, Robin Chater secretary-general of The Federation of International Employers said: “We have always known that GDP figures have been vulnerable to such substantial revisions. That is why it is so dangerous to look at current statistics and draw too many conclusions from them. This is, however, a significant embarrassment for the European Commission as it will be fully aware that all players in the EU economy have relied so much upon their data as a basis for purchasing and investment decisions. Now to be told that the recession was not quite so dramatic after all will make many companies very angry – especially in the finance sector.“
The Federation is currently compiling new figures to create improved estimates for the global economy, prices and remuneration. These will make it much easier to assess the overall movement of economic cycles as they occur.
