Morris Calls for New Models
By Barry Williams, Guardian Staff Reporter
barry@nasguard.com
Unreliable data poses a problem for correctly analysing the Bahamian economy said economist Gilbert Morris. As such, he is calling for new models of economic analysis.
Dr. Morris made this claim during a luncheon meeting at the Rotary Club South East on Wednesday where he said, "Almost all of the data is unreliable in economic terms."
Dr. Morris pointed out that generally the economy consisted of "two theatres of economic activity", also saying that there were also smaller discreet phenomena that contributes to the economic life of The Bahamas. More importantly, he attributed a lot of the unreliable information produced on the economy on what he described as the "black and gray market activities" in the economy which were one of those.
According to Dr Morris, "We have found that the gray to black market is so substantial in The Bahamas, that it influences the growth statistics in ways we have yet to account for."
Organisations such as the International Monetary Fund (IMF) which produce country statistics and which are viewed as credible sources of statistical information on economic activities were no better at disseminating accurate information according to Dr Morris and as such he pointed out, "We accept in my institution little that is said by the IMF or the World Bank or other bodies."
Dr Morris, the Director of the LandfallCentre, suggested that an entirely new interpretative model is necessary, especially for a nation like The Bahamas at its stage of development.
Housing statistics were used as an example where often inflated, but accurate, figures experience a fall off in numbers. "Optimally, in a well-managed economy, an economist would expect an affordable house price to be about 3.5 to four times gross annual income or GDP Per capita." In some countries, such as the U.S., affordable prices are pegged as low as 2.5 times gross annual GDP per capita.
However, in The Bahamas, Dr. Morris said the reality does not square with official current figures. The current GDP figures would suggest housing costs of a certain level.
"In The Bahamas, looking at the most popular affordable home prices approximately $125,000 to $140,000, that would represent, if we accepted the $16,000 to $17,000 GDP per capita, at least eight times annual income," said Dr Morris pointing out that the official GDP data is sometimes unreliable.
"In our view, real GDP per capita is $11,000," said Dr Morris. What this means exactly is that Bahamians could really be paying up to 12.2 times gross annual income for an affordable home. Dr Morris continued to explain, "If we took the average of all home prices in The Bahamas, the number balloons to 24 times gross annual income. In our view, this is extremely problematic for the vitality of our economy and the advancement of the ordinary [Bahamian]."
The extent to which these "grey and black market activities" pose a problem seems alarming. Dr Morris shared his belief that, "Significant grey market and black market activity, including theft, was very prominent in the economy to the degree that if one cleaned up the corruption, many mortgages would go unpaid."
Thursday, January 5, 2006
By Barry Williams, Guardian Staff Reporter
barry@nasguard.com
Unreliable data poses a problem for correctly analysing the Bahamian economy said economist Gilbert Morris. As such, he is calling for new models of economic analysis.
Dr. Morris made this claim during a luncheon meeting at the Rotary Club South East on Wednesday where he said, "Almost all of the data is unreliable in economic terms."
Dr. Morris pointed out that generally the economy consisted of "two theatres of economic activity", also saying that there were also smaller discreet phenomena that contributes to the economic life of The Bahamas. More importantly, he attributed a lot of the unreliable information produced on the economy on what he described as the "black and gray market activities" in the economy which were one of those.
According to Dr Morris, "We have found that the gray to black market is so substantial in The Bahamas, that it influences the growth statistics in ways we have yet to account for."
Organisations such as the International Monetary Fund (IMF) which produce country statistics and which are viewed as credible sources of statistical information on economic activities were no better at disseminating accurate information according to Dr Morris and as such he pointed out, "We accept in my institution little that is said by the IMF or the World Bank or other bodies."
Dr Morris, the Director of the LandfallCentre, suggested that an entirely new interpretative model is necessary, especially for a nation like The Bahamas at its stage of development.
Housing statistics were used as an example where often inflated, but accurate, figures experience a fall off in numbers. "Optimally, in a well-managed economy, an economist would expect an affordable house price to be about 3.5 to four times gross annual income or GDP Per capita." In some countries, such as the U.S., affordable prices are pegged as low as 2.5 times gross annual GDP per capita.
However, in The Bahamas, Dr. Morris said the reality does not square with official current figures. The current GDP figures would suggest housing costs of a certain level.
"In The Bahamas, looking at the most popular affordable home prices approximately $125,000 to $140,000, that would represent, if we accepted the $16,000 to $17,000 GDP per capita, at least eight times annual income," said Dr Morris pointing out that the official GDP data is sometimes unreliable.
"In our view, real GDP per capita is $11,000," said Dr Morris. What this means exactly is that Bahamians could really be paying up to 12.2 times gross annual income for an affordable home. Dr Morris continued to explain, "If we took the average of all home prices in The Bahamas, the number balloons to 24 times gross annual income. In our view, this is extremely problematic for the vitality of our economy and the advancement of the ordinary [Bahamian]."
The extent to which these "grey and black market activities" pose a problem seems alarming. Dr Morris shared his belief that, "Significant grey market and black market activity, including theft, was very prominent in the economy to the degree that if one cleaned up the corruption, many mortgages would go unpaid."
Thursday, January 5, 2006
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