In Jamaica: Mullings, Davies Face Off On GDP Growth

20 October 2011


Key distinction between economic growth and the rate of growth highlighted here. Cabinet Minister seems off in GDP interpretation.

CABINET MINISTER Clive Mullings was on Tuesday ridiculed by the Opposition for an apparent slip in his understanding of fiscal matters, when he attempted to defend an assertion that Jamaica has not experienced economic growth in two decades.

Mullings made the charge last month during a debate in the House of Representatives.

When urged then by South St Andrew member of parliament and former finance minister, Dr Omar Davies, to withdraw, Mullings was unyielding.

Davies resorted to producing statistics to the House of Represent-atives two weeks ago, and said he hoped they would settle the matter. Mullings, however, was not present at the time.

The West Central St James member of parliament said on Tuesday that it was Davies who did not understand how to interpret the figures, and set out to expose what he said was the fallacy of the former finance minister’s reasoning.

“If you are going to establish a period of economic growth or decline, you must examine one period against another. For example, in 1989, where my friend shows there was 7.7 per cent growth, in the succeeding year of 1990, growth was 6.3 per cent.

“Therefore, if you are going to establish if there is growth or decline, you simply take the year 1990 from 1989 and what you find is a 0.7 per cent decline,” Mullings asserted.

The Opposition side of the House erupted with laughter and Davies attempted to rise on a point of order. Mullings, however, would not have it.

“I will not yield,” he said.

Davies, leading crosstalk from the Opposition benches, shouted: “Don’t embar-rass yourself, Clive! Somebody help him!”

However, Mullings, noting he was absent when Davies provided the statistics, said, “I will now deal with it because my friend has failed to employ the rudiment of economic analysis to this data.

“If you look at the data, you will see that the GDP, year over year, has been declining,” Mullings said.

He told the House that Davies was in grave error in the way he had analysed the data on GDP growth, and said he would have had a quiet word with the former minister had he not chosen to bring the figures before the House.

Reasoning error

“I would have to expose, quite frankly, the error of his reasoning of economic analysis,” Mullings added.

A bemused Davies said one way to respond to Mullings was to “look at the faces of the minister of finance and leader of government business and understand the deep embarrassment”.

He added: “That which the minister has said makes absolutely no sense.”

Davies noted that the national accounts were deliberately structured to take into account the growth over base year.

“The national accounts which provides the GDP numbers, they are deliberately structured to respond to the concerns that you have. If you are at 100 this year and in 1989 you grew by seven per cent, the GDP would be 107. If you then record growth of six per cent, it is six per cent of 107 and you add to that … with all due respect, minister, they have taken those basic issues into consideration,” Davies said.

As he proceeded to lecture Mullings, House Leader Andrew Holness rose on a point of order, saying “there is no place on that paper in which this debate can properly be had”.

To that Michael Peart, the leader of opposition business, responded: “Nowhere in Jamaica.”

Davies, in a parting shot at Mullings, said the minister’s assertion about GDP growth “is not filled with sense”.

When he tabled the statistics, Davies said, “The data demonstrate that over the period 1989 to 2007 there was decline in only three years, 1996, 1997 and 1998. The data demonstrate that there has been decline every year since 2007.”

Economist Dr Andre Haughton, lecturer at the University of the Indies, said the national data supports the view that Jamaica has experienced economic growth over the 20-year period.

“Probably what the minister means is that the rate of growth has not improved,” Haughton said.

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