As we all navigate our way through this crisis, we are in uncharted territory. We cannot base our actions on experience because no-one has ever lived through a scenario like this. We do not have enough information about what is going on.
Or do we?
For government, lack of data is an enormous challenge. To make the right decisions on spending and stimulus, it needs to know how economic activity is tracking in real-time. Ideally, it would also have information on specific industries and regions.
Such information only becomes available when Statistics New Zealand releases its GDP figures. But that happens only four times a year, and then with a 2.5-month time-lag.
Especially in a crisis like this, and particularly in an election year, government, business and the wider public should know earlier about the state of the economy. They all need to make decisions now and on more than gut-feeling.
Fortunately, thanks to seven years of economic research at Massey University, there is a better way: GDPLive.
Based on real-time data from the economy, a small team of researchers around Professor Christoph Schumacher has created a model to estimate current GDP as it happens.
Using artificial intelligence, the software becomes more sophisticated with each daily input.
GDPLive’s past predictions were stunningly accurate. On 31 December, it estimated growth of 0.527% for the final quarter of 2019. The actual figure, released by Statistics NZ on 19 March, was 0.528%.
I know this sounds like an ad, but it’s true: the model is a world-first and can even predict an individual sector’s performance and regional economic activity.
No wonder Schumacher has received calls from multiple Asian countries wishing to replicate what he has done for their economies.
Unfortunately, New Zealand’s response has not been entirely positive.
Sure, the 2.5 million visits to GDPLive’s website show public interest in a real-time view of the economy. But so far, government agencies do not engage with its data. Massey University is no longer able to directly fund the project and no private sponsor has put up their hand to cover the annual cost of around $100,000. Ironically, GDPLive may be the victim of New Zealand’s worst-measured GDP decline ever.
And since you asked, as of today for this year’s second quarter, GDPLive estimates it will fall by 16.3%.
The public will hear about this on 17 September.
To find out more about GDPLive, visit gdplive.net.