T

Technical
h i lT Training
i i W Workshop
k h on
Business Statistics

Use of business statistics for compilation of

GDP estimates in current prices

PFTAC
N
November
b 1515, 2013.
2013 Suva,
S Fiji
 Session Outline
Introduction
Basic concepts of the SNA
Three measures of GDP
Examples of data sources by activities
The boundaries of the SNA
Using the SNA
Links to other systems
y
2
 What is the SNA?
Agreed set of international standards to
measure economic activity for purposes of
economici analysis,
l i decision–taking
d i i t ki and d
policy making
A li strict
Applies t i t accounting
ti standards
t d d
Concepts
D fi iti
Definitions
Classifications
Accounting rules
3
 Strength of the SNA
Comprehensive – all designated activities
are covered
Consistent – identical values used for the
consequences
co seque ces oof a ssingle
g e act
action
o
Integrated – all consequences of single
action are captured

4
 Key outcomes
Although concepts described for a single
point in time, main use of the SNA is in
terms of time series
Gives
G es information
o at o o on wealth
ea t aandd how
o tthee
consequences of activities change this
Provides links between an economy and
the rest of the world

5
 SNA for developing countries?
SNA designed to apply to countries at any
stage of development
Implementing only part of the SNA is not
pe e t g a d
implementing different
e e t syste
system
Crucial to understand the principles of the
SNA and then apply them in light of local
circumstances

6
 Basic ideas
Who are the players?
Institutional units grouped into sectors
What do they do?
Engage in three economic activities
Production consumption
Production, consumption, accumulation
How is this measured?
By means of transactions and other flows and by
applying these to stocks of assets
How is this information presented?
In accounts 7
 Institutional units
Households
Legal entities
Corporations
Non-profit
Non profit institutions
Government units

8
 Institutional unit – defining characteristic

Capable of owning goods and assets,

assets
Incurring liabilities,
Engaging in economic activities and
transactions with other units
In its own right

9
 Corporations
Produce goods and services for the market
with the objective of making a profit in the
long term (or at least not making a loss)

Distinguish those providing financial

services from others

10
 Non-profit institutions
Also provide goods and services
May make a profit
Prohibited from distributing this profit to
their owners

Treatment off NPI

T NPIs often
f seen to b
be a
source of confusion

11
 Government units
Set up by means of the political process
Organize and finance the provision of
goods and services to individual
ouse o ds and
households a d the
t e community
co u ty at large
a ge
Also concerned with the distribution and
redistribution of income and wealth

12
 Households
Have a special role
Ultimately all economic activity is to satisfy
needs and wants of households
Households supply labour to other
producing units or may undertake
production themselves

13
 Three economic activities
Production – providing the goods and
services that households want to satisfy their
needs and wants
Consumption – (i) satisfying wants and
needs immediately
immediately, (ii) using goods and
services to produce more goods and services
in future
Accumulation – retaining goods, services and
assets for future use or incurring liabilities
14
 Transactions and other flows
Transactions show how goods, services,
assets and liabilities are exchanges
between institutional units, entered into
willingly by both parties
Other flows show how the value of assets
and
a d liabilities
ab t es cchange
a ge ot
other
e tthan
a by
transactions (either by non-economic
factors or where there is a lack of
willingness of one party)
15
 Transactions
Data on transactions provide basic source
material for the accounts
Remember comprehensiveness,
consistency
co s ste cy aand
d integration
teg at o
Consistent with respect to
Valuation
Time of recording
Classification
16
 Accounts
Goods and services
Sequence of accounts
Current accounts
Accumulation accounts
Balance sheets
Other accounts
Supply and use tables
A
Accounts
t iin volume
l terms
t
17
 Goods and services account
All goods and services produced must be
Consumed
Used for capital formation
Exported
p
All goods and services used must be
Produced in the domestic economy
Imported

18
 Goods and services cont.
Need to adjust for taxes and subsidies
Re-arrange
Re arrange so that
Production (output) + imports + taxes –
subsidies
= Consumption + capital formation +
exports
Further rearrangement gives GDP

19
 Goods and services cont.
Supply Use
Gross Output, less
Intermediate Consumption
=
Value Added by Industry Final consumption expenditure
+ Gross fixed capital formation
Taxes less subsidies on Products Changes in inventories
Acquisition less disposal of
valuables
Exports of goods & services
Less Imports of goods &
services
GDP(P) = GDP(E)
20
 Three Measures of GDP
The Goods and Services Account shows:
GDP(P)
( ) = industryy value added plus
p net taxes
on products (VAT, import duties)
GDP(E) = sum of expenditure items
Third measure, GDP(I), is comprises the
p
components of value added in the income
accounts = compensation of employees +
p g surplus
operating p + net taxes on
production and imports
21
 Composition of value added
Value added represents contribution of
labour and capital to production process
Labour measured by compensation of
e p oyees
employees
Capital remunerated via operating surplus

22
 Compensation of employees
Wages and salaries in cash and in kind
Payments
y for holidays,
y , overtime,, bonuses,, tips,
p ,
provision of free cars, childcare, staff canteen,
housing, etc.
Social insurance contributions
Payable
y byy the employer,
p y actual and imputed
p
To be discussed later

23
 Sources by Activity: Agriculture
Possible
bl indicators:
d values/quantities
l /
Ministry of agriculture
• Actual
• Forecasts, especially for most recent quarters
Surveys (farmers, marketers, customers)
Marketing organizations
Population/employment data (subsistence) (add
trend?)
Trend extrapolation (small Components,
Components services,
services
forestry)
Exports
Sources by Activity: Mining and Quarrying
Possible
bl indicators:
d values/quantities
l /
Production index
Surveys:
• Total / by commodity
• Value / quantity
Royalties
Exports
VAT data
Employment/hours worked (+ productivity trend?)
(Small components?)
Trend extrapolation (small components)
Sources by Activity: Manufacturing, Utilities
Possible quarterly indicators: values/quantities
Industrial production index
Surveys:
• Quantity data
• Sales / revenue / turnover (+ change in inventories of
finished goods, W-I-P)
VAT (sales or value added?)
C
Company reports
t
Combination of above
 Sources by Activity: Construction
Possible
bl quarterly
l indicators:
d values/quantities
l /
Administrative by-product: building permits
Surveys:
• Builders
• Customers of builders
Input indicators (supply of building materials)
Employment/hours worked (+ productivity trend?)
(Small components?)
Trend extrapolation (repairs,
(repairs small projects)
Public sector construction
 Sources by Activity: Trade
Conceptual issues:
Output
p is calculated as trade margins
g
(difference between price realized on a good
purchased for resale and the price to be paid
b the
by th distributor
di t ib t tot replace
l the
th good
d att the
th
time it is sold/disposed of)
 Sources by Activity: Trade
Possible indicators: values/quantities
Surveys of sales/turnover
VAT data
Value/quantity of goods distributed (production +
imports of consumer goods by type of goods)
Employment/hours worked (+ productivity trend?)
Trend extrapolation
p (small
( components)
p )
Sources by Activity: Hotel and Restaurants
Possible indicators: values/quantities
Surveys (revenue, number of overnight stays)
VAT data
Tourist arrivals
Balance of payments travel item
Employment / hours worked (+productivity/trend?)
Trend extrapolation (small components)
Sources by Activity: Transport, Storage, Comm
Possible indicators: values/quantities
Surveys : revenue/quantities (passengers or
passenger km)
passenger-km)
VAT data
Information from large enterprises (telecoms,
airlines,
i li airports,
i posts, rail,
il public
bli transport))
Freight: volume of goods handled
Employment/hours worked (+ productivity trend?)
Trend extrapolation (small components)
Sources by Activity: Financial Intermediation
Possible indicators: values/quantities
Money and banking statistics
Activity quantity measures (number of
accounts, policy-holders, transactions)
Employment/hours worked (+ productivity
trend?)
Sources by Activity: Real Estate, Business Services

Possible indicators: values/quantities

Surveys
Employment/hours worked (+productivity trend?)
VAT data
Administrative by-products
by products
• Real estate: land transfers,
• Lawyers: cases/deaths/divorces/land transfers;
S
Sources bby A
Activity:
i i Other
Oh S Social
i l andd Personal
P l
Services
Possible quarterly indicators:
values/quantities
Surveys
Government funding
g
VAT data
Employment/hours worked
 Boundaries
Non-monetary transactions
Production
Consumption
Assets
National

35
 Non-monetary
Include many transactions in goods and
services even when no exchange of
financial assets
Barter
Transfers in kind
Internal transactions
“Imputations” - transaction actual, only
value is imputed
36
 Production boundary
Include all goods – do not need to decide
whether to sell or use before production
Include services rendered to another unit
Include rentals from owner-occupied
owner occupied
dwellings
Exclude production of services for own final
consumption within households
N t exclusion
Note l i d due to
t thi
third
d party
t criterion
it i
37
 Production boundary cont.
Natural processes under the instigation,
control and responsibility of an institutional
unit
Fish,
s , high
g seas vs.
s fish
s farms
a s
Water catchment vs. transport of water

38
 Consumption boundary
Difference between acquisitions,
expenditure and use
Do-it-yourself activities

39
 Asset boundary
Ownership – environmental assets
Repairs and maintenance – when is this
capital when current expenditure
Human capital

40
 National boundary
Concept of residence – same as BPM6
Centre of predominant economic interest
Importance of imports and exports in
goods and services account

41
 Using the SNA
Monitoring the behaviour of the economy
Interest in changes
g over time
Macroeconomic analysis
International comparisons
Interest in levels of activity
W lf
Welfare

42
 Links to other systems
Other macro-economic systems e.g. BPM6,
GFSM2001, MFSM
Labour statistics
Links to microdata
Commercial accounting
S lli accounts
Satellite

43