Prime Minister Shinzo Abe has ordered a review of the way the government's economic data are compiled, in response to widening claims within his administration that some of the data, in particular the gross domestic product, do not accurately represent real economic conditions. GDP figures can vary depending on what samples you choose and what standards are used to calculate the data. The method of collecting the data should be aligned with changes in socio-economic structures to give a more up-to-date picture of the economy, since data out of sync with such changes could lead to misguided policy steps. The review process, however, must be independent of any consideration by those in power to make the economy look better than it is.
Behind the move is indeed frustration within the administration and the ruling Liberal Democratic Party over the fact that the GDP data continue to point to uneven and fragile growth after more than three years of Abe's signature economic revival plans. In September, the Cabinet Office and the Internal Affairs and Communications Ministry separately launched studies into a possible review of the methods for compiling economic data, while meanwhile the LDP also set up a project team on the issue. During a meeting of the government's Council on Economic and Fiscal Policy late last month, Abe ordered his Cabinet ministers in charge of economic matters to work with the Bank of Japan to put together a basic policy on the matter by the end of the year.
The BOJ drew public attention to the issue in July when its officials released an informal estimate that the economy in fiscal 2014 grew by 2.4 percent, while GDP data announced quarterly by the Cabinet Office showed it had contracted 0.9 percent in real terms. The Cabinet Office calculates GDP by compiling output, capital investment and personal consumption data based on standards set by the United Nations and employed in many other countries. The BOJ estimate calculated the size of the economy based on residential and corporate tax payment data — which it says will give a more precise picture because it covers broader ground — and put nominal GDP for fiscal 2014 at ¥519 trillion, or about ¥30 trillion more than the Cabinet Office figure.