TOKYO (Reuters) – Japan is accelerating its search for ways to improve some of its most important macroeconomic indicators to address long-standing concerns that some data are inaccurate or too volatile.
The review, which is expected to be compiled by the end of the year, could improve sample sizes and modernize collection methods for data on economic growth and consumer spending, which could give policymakers a better sense of whether their policies are gaining traction.
“One of the big goals of this exercise is to improve gross domestic product data and some of the primary data used to calculate GDP,” said Hideyuki Ibaragi, director of macroeconomic analysis at the Cabinet Office, a government agency that coordinates economic policy.
Many economists have expressed concern about GDP because revised data is often very different from preliminary data due to big swings in capital expenditure.
Government officials have also said previously that household spending data makes consumer spending look weaker than it actually is because it relies on a small sample size skewed towards older people who tend to spend less.
The review could have a big impact on policy. GDP is the broadest measure of whether Prime Minister Shinzo Abe’s attempt to reflate the economy is working.
More accurate data on consumer spending is necessary to measure the Bank of Japan’s progress in encouraging inflation.
Until now, Japan has calculated GDP using demand-side data, but in the future the government could consider using some supply-side data to improve accuracy, Ibaragi said.
The government will also look at using “big data”, or very large sets of data on consumers’ habits that private sector companies compile, to supplement data on consumer spending.
The BOJ caused a stir in July when it released a paper saying GDP rose in fiscal 2014 based on calculations of income generated in the economy. This contradicted official data from the Cabinet Office, which showed GDP declined.
Last year, some members of the government’s top economic advisory panel called for improvements to some economic data, but debate is expected to pick up pace this year.
(Reporting by Stanley White; Editing by Nick Macfie)