Your family is like a miniature country, the total income of the main members is the GDP of the family.
Gross Domestic Product GDP, the market value of all final goods and services produced by a country, is one of the best measures of an economy’s income.
Your economy consists of a working couple and two children in school. Each month, you receive a salary of 17 million VND and your wife (husband) receives a salary of 15 million VND. In total, the couple earns 32 million VND a month, or 416 million VND a year, including the 13th month salary. This is your family’s GDP.
But sometimes you get a part-time job, collaborate here and there, and get other income. For example, as I write an article, some places pay 500,000, some places pay 1 million.
Now, suppose there is an agency that tracks and records your household’s income. This agency in national practice is now the General Statistics Office. So far, they have only fully recorded the official income from the couple’s agency, but cannot track the royalties you write for the newspaper. That is, not every income you earn is recorded. The statistical agency only looks at your monthly salary, not your overtime activity.
And now, with GDP recalculation, they somehow get the extra money you earn, added to the family GDP.
On the books of the General Statistics Office, your family’s GDP number changes, increases by a certain percentage, but in reality, your income remains the same. Each person still eats the same bowl of rice. Your wife still buys a pound of meat or fish and two bundles of vegetables every day when she goes to the market. Your children are not transferring from a public school to an international school. The standard of living and spending in the family have not changed.
When your children grow up, they will go to work and start families of their own. These new families are like new businesses entering the economy. It is possible that the statistics agency has not yet updated and observed the income they generate.
Currently, the General Statistics Office has completed and is about to announce the GDP results with a new calculation method. Accordingly, changing the calculation method gives a far different result than the old number, increasing the GDP value by up to 25%.
With the total economic scale by the end of 2017 reaching about 220 billion USD, the new GDP scale is estimated to increase to 275 billion USD. Including the growth rate in 2018 and the first half of 2019, the size of Vietnam’s economy has exceeded 300 billion USD. Vietnam’s GDP per capita thus increased to $3,000, instead of $2,590. According to the General Statistics Office, in this adjustment, 76,000 enterprises that were previously omitted are now counted.
Observing and recording every income generated in the economy is a costly undertaking in terms of both money and time. Omission is almost inevitable. However, 76 thousand businesses are overlooked, accounting for 10% of the total number of existing businesses, but generating up to a quarter of the GDP of the serviced apartment in ho chi minh city, many of them may not be small, making many people unhappy. can’t help but wonder about the calculation method as well as the compliance with the statistical law in the past time.
Worse, the GDP adjustment could damage Vietnam’s national credibility. Regardless of objective or not, with the adjusted scale up to more than ¼ of the economy, it is really considered a shock in the eyes of international observers. There is already a list of countries that have been accused by Western media and organizations of “suspicious GDP”, such as China or India. A recent Brookings Institution study found that the size of China’s economy is about 12 percent smaller than it is reported, and GDP growth is overstated by about two points. percent per year for the recent period. Likewise, India is also said to have a real GDP growth rate of around 4.5%, instead of approximately 7% per year as reported. Flashy numbers mean nothing if international investors lose confidence.
After all, objectively calculated or not, the new GDP and its accompanying indicators are still just statistics on the books. It does not relieve people from worrying about tomorrow’s food and money, but it does add to worries about a new surge in debt and public spending.