View: Latest GDP numbers do a better job of deciphering the past than of predicting the future
data analytics, predictive tech and AI, data points are valuable not so much for what they tell us about the past but for how well they can predict the future. By that yardstick, Q1 GDP numbers released by NSO last Friday for the quarter ended June 2024 are likely to fail the test.
In a world dogged by uncertainty, where black swan events are seemingly no longer the exception, macroeconomic numbers like GDP are incredibly hard to predict. The past is no guide to the future. No one foresaw the pandemic or, further back in time, the Global Financial Crisis, both of which saw GDP growth collapse dramatically.
Sure, these were catastrophic events. But, thanks to geopolitics, there are just too many unknown unknowns in the world today to expect GDP estimates for a single quarter to give us more than a very rough idea of how growth is likely to pan out in future.
However, future performance is never completely divorced from the past. And while it is true that one 'can't drive a car looking in the rearview mirror', as comedian Steve Harvey once put it, the latest numbers contribute in two invaluable ways.
- They give us a much better idea of how the economy performed during the March-June 2024 period, enabling 'prompt corrective action' wherever necessary. The recent policy announcements on industrial clusters and infra development must be seen in this light.
- They facilitate a more informed guesstimate about the future. Agreed, quarterly growth numbers are often revised since data for MSMEs is incorporated with a
