Japan data fudge viewed as hurting credibility

TOKYO－The Japanese government overstated construction orders data received from builders for years, said Prime Minister Fumio Kishida on Wednesday, in an admission that could dent credibility of official statistics widely used by investors and economists, Reuters reported.

It was not clear why the government started the practice of rewriting the data. It is also unclear how GDP figures may have been affected, though analysts expected any impact to be minimal, particularly as the builders involved were likely to be smaller firms.

"It is regrettable that such a thing has happened," Kishida said. "The government will examine as soon as possible what steps it can take to avoid such an incident from happening again."

He made the comment in a parliamentary session after the Asahi newspaper reported that the Ministry of Land, Infrastructure, Transport and Tourism had been "rewriting" data received from about 12,000 select companies since 2013 at a pace of about 10,000 entries per year.

Kishida said "improvements" had been made to the figures since January last year and that there was no direct impact on GDP data for fiscal years 2020 and 2021.

Though the impact on past GDP numbers may be small, the revelation is likely to raise questions about the reliability of data that is a cornerstone for economists and investors looking to understand and forecast trends in the world's third-largest economy.

It is also not the first time that issues have been raised about government data, including a flaw in health ministry data in 2018.

"The biggest problem is not the effect on the GDP per se, but the damage to reliability of (official) statistics," said Saisuke Sakai, senior economist at Mizuho Research and Technologies.

"We can't help doubting this kind of issue could happen across government ministries."

The survey compiles public and private construction orders, which totaled roughly 80 trillion yen ($700 billion) in the 2020 fiscal year, and is among data used to calculate GDP.

The ministry collects monthly orders data from construction companies through local prefecture authorities.

'Extremely regrettable'

Land Minister Tetsuo Saito, a member of junior partner Komeito party in the ruling coalition, confirmed the practice in parliament, calling it "extremely regrettable".

When asked about the issue, the government's top spokesperson said only the land ministry had been instructed to analyze "as soon as possible" on what led to the practice.

"We will first wait for the results of that investigation," said Chief Cabinet Secretary Hirokazu Matsuno during a news conference when asked whether past GDP figures, the government's monthly economic report or other data may need to be revised.

The rewriting of data, which may be in breach of the law, continued until this March, reported Asahi.

Agencies - Xinhua