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Absolutely accurate forecasts unfeasible: GSO
Le Thi Minh Thuy, Deputy Head of the Trade, Services and Prices Department under the General Statistics Office (GSO), talks about why the figures forecast by GSO about the trade deficit were far different from reality.
The figures announced by GSO about the trade deficit in the first months of the year sparked big worries among economists and businesses. Leading experts, based the figures, gave pessimistic conclusions about the national economy, saying that Vietnam’s foreign currency reserves were not big enough to bear such a high trade deficit.
The conclusions immediately triggered a wave of foreign currency speculation, pushing the dollar to above VND19,000/US$1.
However, the situation has become quite different in the last two months. The trade deficit in June was $736mil only, while GSO predicted the figure would be $1.3bil.
Explaining the big gap, Thuy said that there were special and unexpected happenings which invalidated the predictions.
She said:
In the first four months of the year, the trade deficit in reality was always higher than the predicted figures. For example, in January, the predicted figure was $1bil, while the actual trade deficit was $2.287bil. Similarly, the figures in February were $2bil and $2.779bil, in March were $2.3bil and $3.284bil, and in April $2.75bil and $3.219bil.
The big gaps between the forecast figures and the figures in reality could be explained by the unexpected sharp increase of car and motorbike imports in Q1 and of gold imports and consumer products in Q2. The gold imports in the first five months of the year were valued at $2.7bil.
Why were the estimated figures in the last two months higher than the figures in reality?
In May and June, the trade deficit decreased sharply because of decreased imports and increased exports.
During the two months, a big volume of commodities, which Vietnam had to import previously, was re-exported (gold, steel and cars), which has never been seen in history. We could not have anticipated the re-export boom.
At the moment when we calculated the figures, the unexpected things had not occurred, therefore, the figures we released were different from the real figures.
Do you mean that the gap between the forecast and the real figures was because of the difference in the time of calculation?
Yes, I do. By the way, regarding statistics procedures, Vietnam is now the only country in the world that gives estimated figures.
In Vietnam, GSO is the organ responsible for providing figures to serve the government’s management operation. Therefore, we have to begin calculating to provide statistics on the 19th or 20th of every month to serve the government’s meetings, usually between the 22-24th.
We only have data as of the 15th, while we have to estimate the data for the last 15 days of months. In such conditions, it is impossible to ask that the estimated figures be dead on.
I understand that GSO only has the data of the first 15 days of months. But do you think that GSO should also consider the possible impacts of policies?
Of course we consider the possible impacts of policies. However, we cannot be exact all the time.
For example, when the inflation increased, the government decided to cut taxes on 16 items, which immediately led to the sharp increases of imports, thus pushing up the trade deficit.
When the government raised the car import tax, we expected that imports would decrease. However, in fact, imports increased sharply as businesses tried to import more cars before the tax increase decision came into effect.
We also consider reports made by local statistics agencies, and then refer to opinions of associations. However, you should understand that not predictions become true.
Businesses cannot give exact estimates about their imports themselves. For example, a business may give a pessimistic forecast about the exports of the company at the moment of making the report. However, after that the company could sign a big contract.
One more question. Was GSO influenced by any outside source when making the figures?
No. To provide figures monthly, statistics divisions of the General Department of Customs, Ministries of Industry and Trade, and Planning and Investment sit together. These are independent organs, which specialise in data, and are not related to policy-making bodies.
If we had wanted ‘beautiful’ figures, we would have released lower figures about the trade deficit.
However, the incorrect figures clearly affected the government’s decisions and society’s psychology.
Estimates have helped a lot in the government’s decision-making process.
I think that unexpected things will not occur in the last months of the year as import-export activities will return to normal. In normal conditions with few unexpected things, estimates are very reliable. In previous months, the gap between estimated import-export figures and the real imports-exports was just several tens of millions of dollars.
VNN
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