Training Session on National Accounts

1. Training Session on National Accounts ICP Global Office September 2011

2. Approaches for Splitting GDP Expenditures

3. ICP requirement: • detailed data needed • only once every several years • Disaggregating GDP into the detailed basic headings is the core part of the national accounts data needed for the ICP • Countries will experience some difficulties in providing estimates of final expenditure for all the basic headings required • Participating countries should assign weights to all basic headings

4. National accounts data for 2011 need to be available by July 2012 (some cases based on preliminary data) • Many basic heading details might have to be estimated by using data relating to years earlier than 2011 to split the major aggregates for 2011

5. Five approaches to splitting GDP Direct estimation The preferred method, if data sources exist 1 Extrapolation Update an earlier expenditure breakdown using assumptions on population growth, price changes etc 2 “Borrowing” a per capita quantity or volume Requires clustering countries for each BH or group of BHs Multiply the per capita quantity or volume by the population of the “borrowing country” and the price level index between the two countries 3 “Borrowing” a structure Adjust the “borrowed” structure by a vector of the price level indexes between the two countries 4 Using expert opinion Consult retailers, manufacturers, marketing experts, chambers of commerce and other sources 5

6. Direct estimation • Estimation techniques used in compiling national accounts can assist in obtaining the detailed data required for the ICP: • commodity-flow method • supply-use tables (SUTs)

7. Extrapolation Common cases country to regularly compile annual production-based measures of GDP but expenditure-based estimates are available infrequently 2011 level of expenditure GDP can be assumed to be equal to that measured from the production side of the accounts The Global Office encourages countries to develop improved procedures to allocate expenditures to basic headings: Commodity-flow techniques and supply-use tables the experience and knowledge of the national accountants, can be invaluable in calculating the detailed splits required for the ICP Last resort procedure: prorate the level of GDP according to the basic heading distribution from the 2005 ICP, if available

8. Extrapolation ii) Expenditure-based estimates of GDP are available on a regular basis but there is a considerable lag in producing them and they have not yet been updated to 2011 statistical surveys Administrative records (Custom data for Exports and imports of goods, building approvals for gross fixed capital formation on buildings , credit cards for household final consumption expenditure, VAT data ) Othersources of information (publications of regulatory bodies and trade associations)

9. Extrapolation ii) Expenditure-based estimates of GDP are available on a regular basis but there is a considerable lag in producing them and they have not yet been updated to 2011 statistical surveys Administrative records (Custom data for Exports and imports of goods, building approvals for gross fixed capital formation on buildings , credit cards for household final consumption expenditure, VAT data ) Othersources of information (publications of regulatory bodies and trade associations)

10. A Conditional Step-by-step Process Consider a Basic Heading Yes Yes Borrow per capita value Use Direct Approach No No Is there data for the BH for a previous year? Is there data for the BH for the year? Can you obtain data from expert? Is there country with similar per-capita value? Yes 1 No 3 Yes Use Expert Opinion 5 No Borrow from country with similar structure Use Extrapolation 2 4

11. Model Report on Expenditure Statistics (MORES)

12. The Model Report on Expenditure Statistics (MORES) The MORES aims to assist countries to compile Detailed expenditurevalues for each basic heading of the ICP classification. Information on the splitting approach Information on the indicators that were used/or are going to be used to estimate the expenditure values

13. MORES’s Structure NA data information for the latest year available Tabs 1 and 4 include initial expenditure values, estimated expenditure values and the discrepancies between those two values. It is recommended that the user insert the values at the basic heading levels. All aggregated levels will be calculated automatically. Tabs 2 and 5 compile, for each basic heading, the detailed information of the splitting approach and for all indicators used to collect data related to National Accounts and reveals the estimated expenditure values for the latest year available or for 2011. Tabs 3 and 6 summarize the final expenditure values for the latest year available or for 2011 respectively and it will be automactically filled with the discrepancy information of the initial and estimated expenditures values. NA data information for 2011 Parameters used in previous tabs

14. Expanded Form 1 GDP Classification Initial Expenditure Value Estimated Expenditure Value Discrepancies Code Heading Sheets 1 and 4 include initial expenditure values, estimated expenditure values and the discrepancies between those two values. 4 5 1 2 3 100000 Gross Domestic Product 110000 Individual Consumption Expenditure by Households 110100 Food and non-alcoholic beverages 110110 Food 110111 Bread and cereals 110111.1 Rice [...] […]

15. Estimation of BH Expenditures # MORES Template Indicator name Sour ce name Year Value Unit Sheets 2 and 5 compile, for each BH, the detailed information of the splitting approach and for all indicators used to collect data related to National Accounts and reveals the estimated expenditure values. Code Name 3 4 5 6 7 8 1 2 100000 Rice Splitting Approach 2 Extrapolation Code Estimated Expenditure for

16. Final Expenditure Values GDP Classification Expenditure Value Code Heading Sheets 3 and 6 summarize the final expenditure values for the latest year available or for 2011 respectively and it will be automatically filled with the discrepancy information of the initial and estimated expenditures values. 1 2 3 100000 Gross Domestic Product 110000 Individual Consumption Expenditure by Households 110100 Food and non-alcoholic beverages 110110 Food 110111 Bread and cereals 110111.1 Rice [...] […]

17. Completing the MORES in 6 Steps Sheets 1 1 Complete column 3 of sheet 1 with whatever aggregate estimates are available 2 2 Apply 5 approaches 3 From 2 to 1 Column 4 of sheet 1 receives expenditures values from sheet 2 4 1 Discrepancies between columns 3 and 4 appear under column 5 5 1 or 2 Make adjustments to resolve discrepancies 6 3 Read results if discrepancies solved

18. MORES – Case Study

19. Completing MORES - Example Step 1 Complete Table1 with whatever aggregate estimates are available.

20. Completing MORES - Example Step 2 Complete Table 2 for each basic heading using five splitting approaches.

21. Completing MORES - Example Step 3 Table 3 will be automatically filled once discrepancies between aggregate figures and summation of BHs have been resolved.

22. Fictitious country case statistics 48 indicators were used and five major indicators account for 46% (162 out of 351).

23. Fictitious country case statistics

24. Multiple Approach Examples

25. Issues Lack of sources • Lack of overall resources, heavy dependence on expert opinions Iterative process • Iterative process occurs when borrowing a structure from another country Distribution of specific BHs • Distribution of specific basic headings such net expenditures abroad Limited adoption of imputing methods • Limited adoption of imputing methods including the user cost method (housing)

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