TOKYO (Reuters) - Japan’s cabinet approved on Tuesday a plan to improve the accuracy of the government’s initial estimate of gross domestic product by collecting more data from the private sector on capital expenditure.
Japan’s government will test the new calculation method from fiscal 2019 with the goal of making a final decision by fiscal 2022, the internal affairs ministry said in a statement.
The changes could become a key factor in measuring whether the government’s efforts to revitalize the economy are actually working or not.
In the past, there have been large differences between preliminary and revised gross domestic product (GDP) data due to big swings in capital expenditure, which has caused some economists to question the accuracy of Japan’s GDP.
To solve this problem, the finance ministry will bring forward the timing of its quarterly survey on capital expenditure, according to the plan.
The Cabinet Office will use part of the results of this survey to calculate the capital expenditure component of preliminary GDP, the plan said.
Japan’s economy has grown for eight consecutive quarters, which is the longest period of continuous growth since the 1980s bubble economy, but constant revisions to past data mean this growth spurt was not always clearly reflected in the data.
Since taking office in late 2012, Japanese Prime Minister Shinzo Abe’s government has taken steps to address long-standing concerns that some of Japan’s indicators are too volatile and that some data may not reflect the underlying economy.
Reporting by Stanley White; Editing by Sam Holmes