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Economy

Japan to revamp economic data amid criticism over GDP

Change to take effect in 2022 expected to reduce frequent wild revisions

Workers at a steel factory in Mie Prefecture, central Japan. Detailed industrial output data will help improve Japan's estimates of its GDP. (Photo by Koji Uema)

TOKYO -- The Japanese government has belatedly set about making its economic data releases more up-to-date, as the country hopes to bring the quality of its statistics more in line with the standards of its peers in the Group of Seven leading industrial nations.

The change will be achieved by releasing business investment data in a more timely manner so it can be incorporated into the quarterly gross domestic product data, according to people familiar with the matter. GDP estimates will start being released under a revised format from the year starting April 2022 at the earliest.

Japan's GDP data estimates are known to be prone to wild revisions. On Dec. 9, for instance, the Cabinet Office revised its estimate for July-September growth to 1.8% from 0.2% as reported in its first estimate less than a month before.

In 2010 and 2012, preliminary estimates of negative growth were revised up to positive growth in second estimates. GDP estimates are routinely updated in many G-7 countries, but the extent of revisions in Japan is far more pronounced.

Real quarterly GDP figures in Japan changed an average 0.4 percentage points between initial estimates and assessments half a year later, the most among G-7 nations, an analysis of statistics from 2001 to 2018 has found.

One reason for this is the timing of business investment data, which is compiled by the Ministry of Finance. The initial estimate, released about six weeks after the close of each quarter, is compiled by the Cabinet Office based on such information as household spending surveys, trade statistics and industrial output, but before the release of a quarterly business investment survey or more detailed industrial output data, both of which feed into revised estimates to give a better picture of facilities and inventory investment.

The Organization for Economic Cooperation and Development has urged Japan to take steps to make its revisions smaller.

Under a new format, the Ministry of Finance will make some of the quarterly business investment survey, covering some 37,000 companies across Japan, available to the Cabinet Office in time for the first GDP estimate. The data that will be made available will include capital outlays and research and development spending at large corporations.

The Cabinet Office will examine whether such information will help reduce the changes between the initial and second GDP estimates over the next eight quarters, and will begin releasing data under the new format if the results turn out to be positive.

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