Japan admits to overstating construction orders, which could dent credibility of GDP data
- Prime Minister Fumio Kishida told parliament it was ‘regrettable’ that the data received from builders had been overstated, and it would not happen again
- While it may have a small impact on past GDP numbers, it could raise questions about the reliability of data used by economists to understand the world’s third-largest economy
It was not clear why the government started the practice of rewriting the data. It is also unclear how gross domestic product (GDP) figures may have been affected, though analysts expected any impact to be minimal, particularly as the builders involved were likely to be smaller firms.
“It is regrettable that such a thing has happened,” Kishida said. “The government will examine as soon as possible what steps it can take to avoid such an incident from happening again.”
He made the comment in a parliamentary session after the Asahi newspaper reported the Ministry of Land, Infrastructure, Transport and Tourism had been “rewriting” data received from about 12,000 select companies since 2013 at a pace of about 10,000 entries per year.
Kishida said “improvements” had been made to the figures since January 2020 and that there was no direct impact on GDP data for financial year 2020 and 2021.
While the impact on past GDP numbers may be small, the revelation is likely to raise questions about the reliability of data that is a cornerstone for economists and investors looking to understand and forecast trends in the world’s third-largest economy.