Peru's GDP growth miracle revealed

I've been sitting here this morning wondering how Peru's FinMin liar Carranza can possibly claim his country will grow by 5% and "lead the world in growth" in 2009, while neighbour Chile (a far more serious nation) predicts its growth at a mere 1.2% (a wholly believable figure, FWIW). And I've come to the only possible conclusion that makes any logical sense:

It must be the bus accidents.

Peru is a notoriously dangerous place to travel by road, with a lax and corrupt government that takes bribes from lax and corrupt bus companies so that they never ask too many questions about the way they run their plant and drivers into the ground for the sake of an extra dollar in profit. I mean, if you have two drivers working 12 hour shifts it beats the hell out of 3 doing eight hours each, does it not? And who needs new rubber on tires anyway?

In fact the last 24 hours have been pretty typical on the highways and byways of Peru, with this crash yesterday killing 10 and another crash in this report killing 14 people this morning. But the thing is, if you base your life on GDP as the prime measurement for a country's development, these horrific deaths are good news for Peru. It works like this:

Upside: Here's an approximation of all the economic activity the two bus crashes are creating:

24 funerals @ U$1,000 = U$24,000
Media coverage (reporter's pay, extra newspaper copies sold etc) = U$50,000
Cost of three replacement buses = U$240,000
Emergency services attention (single crew for 24 hours per accident) =U$7,000

Then the downside, as you have to subtract what these people would have earned during the year if they weren't now dead.

Subtract 24 lost salaries at National Average for 2009 = -U$96,000

Final Benefit to Peru = $225,000

Or in other words, by killing these 24 people on the roads of Peru, the country has managed to triple their contribution to country GDP in 2009! With so many accidents and deaths reported on Peru's highways every year, it's not surprising after all that it will outgrow Chile in 2009.

And if you're looking at this post and thinking it's a trick, believe me that this is a pretty fair ballpark on how GDP calculations work. For example, the bushfires in Australia right now will be looked upon as a benefit by economists. I betcha Twobreakfasts is hoping for another big earthquake this year.