VIEW POINT ON THE RECENT GDP REBASING LESSONS TO LEARN:

GDP rebasing does not directly affect the actual cost of living or inflation, but it can create significant indirect impacts on public perception and policy:

Key Relevance:

1. Statistical Reset, Not Economic Change:

- Rebasing updates the base year for GDP calculations (e.g., reflecting newer industries like tech/services).

- It does not alter real household incomes, food prices, or fuel costs.

2. Perception Gap:

- Nigeria’s 2014 rebasing nearly doubled its GDP overnight (making it Africa’s largest economy).

- This created a false impression of sudden wealth, while inflation soared and wages stagnated—deepening public distrust.

3. Indirect Economic Effects:

- Policy Missteps: Governments might delay critical reforms (subsidy removals, forex adjustments) citing "GDP growth," worsening inflation.

- Investor Sentiment: A larger GDP can attract foreign investment, but if mismatched with reality (e.g., Nigeria’s 2024 inflation at 33.95%), confidence collapses.

4. Long-Term Risks:

Like Argentina's historical rebasing, frequent rebasing without tackling structural issues (productivity, corruption, import dependency) can:

- Mask economic fragility.

- Erode trust in official data.

- Delay urgent anti-inflation measures (e.g., monetary tightening).

In Short:

Rebasing is an accounting update, not economic progress. Actual inflation stems from currency devaluation, supply shocks, fiscal deficits, and policy failures. When elite dismissal of lived hardship (“But our GDP grew!”) replaces genuine reform, rebasing harms public trust and delays solutions.

(For context: Nigeria’s 2013–14 rebasing showed 89% GDP jump while inflation rose from 8% to 13% by 2016.)

CITMNIGERIA