FX.co ★ Japan to try new approach to measure GDP

On Tuesday, Japan’s government approved the plan to improve the accuracy of its initial estimate of gross domestic product by starting to collect more data from the private sector on capital expenditure.

The new calculation method will be tested from fiscal 2019 with the purpose of making a final decision by fiscal 2022.

According to the statement of the internal affairs ministry, the changes would become the key factor in determining whether the government’s efforts to revive the economy are effective or not.

Earlier, preliminary and revised GDP estimates were very different there due to big fluctuations in capital expenditure, which made some economists question the accuracy of calculating this indicator.

To solve this problem, the finance ministry will report on the timing of its quarterly survey on capital expenditure. The Cabinet Office will use part of the results of this survey to measure the capital expenditure component of preliminary GDP.

Japan’s GDP has grown for eight quarters in a row, which is the longest continuous expansion since the 1980s. However, constant revisions to past data mean this growth spurt was not always clearly reflected in the data.