The lesson we are learning at the moment is, that countries with unreliable – or downright incorrect – statistics will be punished by the markets. Not necessarily gradually, but often abruptly. The punishment is downgrading of the sovereign debt, resulting in substantial widening of interest-rate spreads. An economic cycle is defined on the basis of real GDP.
Compilation of GDP is not an easy task, especially not in a small, open economy like Denmark, even in calm periods. But during the crisis, we were way off the mark. One of the Danish government’s policy measures was to allow companies to postpone VAT payments in order to strengthen their financial position.