NZ GDP Could be 10% Higher
February 20, 2012 New Zealand Finance
New Zealand’s GDP could be calculated to be as much as 10 percent higher than it currently is, if valuations methods were in sync with those used in Australia.
In a speech given at the Trans Tasman Business Circle on February 17th the Governor of the Reserve Bank of New Zealand Alan Bollard said that the New Zealand GDP per capita could be much higher if it was calculated using a different methodologies and took into account more aspects of the economy.
According to the Governor, if consistent methods of measuring GDP were used across all OECD countries then the perceived economic gap between New Zealand and Australia would be significantly smaller. The Reserve Bank currently estimates that the country’s GDP could be measured to be up to 10 percent higher if the calculation method was revised.
The Reserve Bank pointed to several aspects of the GDP calculation which could raise the country’s calculated GDP figure. One of the main changes that could be implemented is including estimates of the country’s “unobserved economy”, which could raise the national GDP figure by as much as 2 percent. Changing the method for calculating the impact of financial services could also lead to an increase in the GDP total of up to 2 percent. Improving the method for valuating residential buildings could add an extra 1.5 percent to the GDP total. Alan Bollard added that Statistics New Zealand is currently working to implement a new international standard for the measurement of national statistics, which is expected to see the New Zealand GDP revised upwards by up to 3 percent.
Alan Bollard suggested that implementing new measurements methods and calculations could help investors and taxpayers make better informed economic decisions, as they will have more accurate and comparable data about the economic differences between Australia and New Zealand, and could potentially stem the growing number of New Zealanders moving to Australia.
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