March 21, 2019
IN an economic bulletin published on Tuesday, the Department of Finance (DoF) revealed an unusual problem in the country’s trade data: According to the International Monetary Fund’s (IMF) Direction of Trade Statistics report, the Philippines exported about 30 percent more in 2018 than data from the Philippine Statistics Authority (PSA) indicated. The difference between the two figures was significantly wider than the 22.9 percent discrepancy seen in 2017.
The Finance department said the PSA statistics showed a 1.8-percent decline in exports year-on-year but data gathered by the IMF from the Philippines’ trading partners showed that exports actually grew by 8.2 percent in 2018.
Philippine exports were apparently much larger than the government’s own data indicated, and that is actually good news.
That suggests that risks faced by our economy are, perhaps, not as worrisome as previously thought, and that the economy is still quite resilient.
The data discrepancy is welcome in the sense that it indicates the economy is stronger than some other metrics suggest.
It is a bit troubling, however, that there could be such a big gap between what the Philippines recorded as having exported, and what our trading partners recorded as having received. The implication is that government data may not be very reliable, which is a disturbing possibility to consider.
It is possible that the IMF data is not completely accurate, but this seems unlikely. The trade data gathered by the IMF is based on customs records of individual countries, which have no incentive to underreport their collections.
The DoF statement suggests that there are some common reasons for a discrepancy between the country’s own figures and external trade data. For instance, changes in currency exchange rates can change the value of shipments between the time they leave port here and arrive at their destination. Some shipments might be misrecorded as a result of simple paperwork errors, or confusion in classifying shipments.
The reason the discrepancy between the PSA’s data and the IMF’s data is worrisome is that government data is used by businesses, analysts and government planners to plan business strategies, make forecasts of future economic conditions and set economic policy for the country.
Any plans, policies and forecasts that have been made based on government data that shows exports decreased in 2018 are, therefore, based on wrong information. This may not be a problem, but it could lead to ineffective or unintended policy action.
For example, the belief that exports decreased might attract government resources and attention to exporters who do not really need support, while other parts of the economy that do need attention are overlooked.
Hopefully the PSA will invest some time in assessing its own set of export data alongside that of the IMF, and the government can find ways to reconcile them.
By conducting a careful analysis, the government’s statistical authority can reassure businesses and the public that it is doing its best to constantly improve its data collection and recording practices, and provide the country with the most accurate information available.
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