How reliable are our GDP numbers?

From Zambian Economist Wed Dec 5 2012, 15:21:00

One of the questions we get often relates to Zambia's GDP. Recently someone asked : are the GDP growth figures a true reflection of Zambia's economic performance?

The simple answer is no because GDP has several limitations for a country such as ours.

First, GDP measures the value of output produced in Zambia. But only that which is officially recorded. It does not capture our large informal sector (believed to be around 40% - 60% of gross national income), where the bulk of transactions are not recorded. So countries which record transactions better will have higher GDP than Zambia but that does not mean our true national output is smaller.

Secondly, GDP does not take into account negative externalities. So if you produce more copper and you cause sickness to people around Kankoyo, they say GDP has increased. But that is only because we are not producing the 'right amount' of copper in a safe and humane way. The true cost of producing copper is not being included.

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