Just before growth rates are announced
On Wednesday growth rates for the first quarter of 2010 will be announced. The figures will suggest that Turkey's economy grew quite rapidly compared to the same period in 2009. Commentators have a consensus on this. On the other hand, we will also realize that compared to the peak level before the global crisis gross domestic product (GDP) and thus GDP per capita are still quite low.
Today I will return to a question that was addressed here before but was not answered precisely: There exists a considerable difference between the pace of growth of the value added in industrial sector as a sub-item of the GDP and the pace of growth of industrial production index since the second quarter of 2009. The answer we need is on the reason for this difference.
Table 1 compares the mentioned growth rates. Over the period between March 2006 and March 2009 the difference was maximum 1.9 and minimum 1.8 points. However for the last three quarters of 2009, the difference as a ratio to GDP is quite more drastic: growth rate of industrial sector as a sub-item of GDP is much higher than that of industrial production index.
Table 1: Industrial sector in GDP and industrial production index: annual percentage changes
|
Date |
Industrial production index (1) |
GDP industrial sector (2) |
Difference (2)-(1) |
|
March 06 |
8.2 |
6.4 |
-1.8 |
|
June 06 |
11.6 |
12.2 |
0.6 |
|
Sept 06 |
7.3 |
9.1 |
1.8 |
|
Dec 06 |
4.4 |
5.7 |
1.3 |
|
March 07 |
11.0 |
9.6 |
-1.4 |
|
June 07 |
5.8 |
4.7 |
-1.1 |
|
Sept 07 |
6.0 |
5.1 |
-0.9 |
|
Dec 07 |
5.5 |
4.3 |
-1.4 |
|
March 08 |
7.3 |
8.5 |
1.2 |
|
June 08 |
4.2 |
4.1 |
-0.1 |
|
Sept 08 |
-1.4 |
-0.1 |
1.3 |
|
Dec 08 |
-12.5 |
-10.6 |
1.9 |
|
March 09 |
-22.0 |
-21.1 |
0.9 |
|
June 09 |
-15.4 |
-11.4 |
4.0 |
|
Sept 09 |
-8.1 |
-4.5 |
3.7 |
|
Dec 09 |
9.0 |
11.4 |
2.4 |
|
March 10 |
17.3 |
- |
- |
First let me underline that industrial production index is calculated on the basis of production levels in several sectors. Whereas, GDP and sub-items are calculated on the basis of not the level of production but the value added of production. Therefore, it is natural that the two rates of growth are different. The table also indicates there is no such equivalence.
But the point emphasized here is that the movement in 2009 is in favor of GDP to a large extent. There might be two explanations for this: first, it is possible that in 2009 value added in industrial sector has improved and/or goods with higher value added were produced. Second, it is possible that TURKSTAT started to work with new value added rates derived from the renewed input-output table.
Maybe TURKSTAT made an announcement that I did not notice. If so, we have no problems. But if TURKSTAT did work with new value added rates or changed the method used someway but did not made an announcement in this respect, it has to. In addition, figures and thus growth rates for previous years must be recalculated with the new method, too.
This commentary was published in Radikal daily on 28.06.2010
