Real-time data is a key component of economic sustainability, enabling rapid responses to constantly changing situations. For the past five years, GDP Live – with seed funding from Massey University – has been providing publicly available GDP data that monitors the performance of the New Zealand economy in almost real time. This year Britomart’s parent company, Cooper and Company, joined other businesses in a three-year sponsorship commitment to support and further develop GDP Live under the supervision of the Pro Vice Chancellor of the Massey Business School. Professor Christoph Schumacher is the founder of GDP Live.
JEREMY HANSEN We’re all accustomed to hearing GDP figures. What does GDP Live do to change the way we currently receive that information?
CHRISTOPH SCHUMACHER Currently, official figures are announced with a three-to-six-month delay. For example, the most current official information on GDP is that during the period 1 April to 30 June 2023, our economy grew by 0.9 percent. And if you go back to the first quarter of the year, we were told that we had negative growth of -0.1 percent. We were also told we were in a recession. We then had to wait another three months for the next announcement to see if the economy continued to shrink or if we are in recovery. This creates uncertainty and anxiety. Imagine you go to your doctor for a health check and get told that you were healthy six months ago. Wouldn’t you respond that, while this is good, you want to know if you are healthy right now? This is what GDP Live does. It doesn’t tell you what the economy was doing several months ago, but what it is doing right now. GDP Live tracks GDP in almost real time – we receive our data every morning at 2am, so we are a few hours behind – so if you are wondering how the economy is performing, you can check what the economy is doing right now compared to being told what the economy was doing six months ago.
JEREMY Why has the official system been so sluggish at reporting this data in the past?
CHRISTOPH GDP Live takes a very different approach in estimating GDP. StatsNZ collects official data from government agencies in order to compute the GDP value. This takes time. Imagine having to wait until a variety of agencies transfer their data to you. GDP Live receives daily data from several data partners; every day, we know what is going on in New Zealand. We then feed this data into a machine-learning algorithm which was trained with nine years of official data. This way, we get a good estimate based on how changes in our daily data relate to changes in GDP.
JEREMY How useful is GDP as a measure of economic health, and what other data should it be combined with to give a robust picture?
CHRISTOPH Up-to-date data helps organisations in their planning. GDP measures consumption. If you are a manufacturer, retailer, or in the logistics business, wouldn’t you want to know if the economy is growing right now or shrinking? Having more up-to-date data also helps you to make financial decisions, as GDP is related to interest rates, exchange rates and inflation. GDP is the most often-used measure of economic health. Given that it is recognised internationally, it also allows for comparisons. This is important, especially if we look at exports. The amount of products we sell internationally is related to how well our trading partners are doing, but GDP is very focused on consumption and production. GDP doesn’t measure wellbeing. It measures how much we consume but not what we have to do to afford consumption or produce output. So GDP is one measure amongst others to evaluate how our economy is doing.
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