My estimate using my monthly alternative GDP calculation underestimated the decline in Q1 GDP in China. In fact GDP declined by 9.8% in Q1. And no, that's not an annualised rate. Because this decline was caused by the coronavirus, it affected services more than manufacturing, which is unusual in an economic downturn. And my alternative GDP estimate has no services component, mainly because there are few services indicators in China. It does however include the volume of retail sales, but if there existed more indices of services, I might include them.
The first chart shows the official estimate of GDP vs my alternative GDP. The second chart show my estimate of quarterly GDP derived using the Chow-Lin technique on my monthly alternative GDP calculation, plus annual data prior to the period I start my estimates. This is quite clearly the worst downturn China has experienced, apart from the catastrophes of the "Great Leap Forwards" and the "Cultural Revolution".
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