Training Session on National Accounts ICP Global Office September 2011

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

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 i)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 ) Other sources 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 ) Other sources of information (publications of regulatory bodies and trade associations)

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

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

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 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. 13 Parameters used in previous tabs NA data information for the latest year available NA data information for 2011 MORES’s Structure

Sheets 1 and 4 include initial expenditure values, estimated expenditure values and the discrepancies between those two values. 14 Expanded Form 1 Code Heading Initial Expenditure Value GDP Classification Gross Domestic Product Individual Consumption Expenditure by Households Food and non-alcoholic beverages Food Bread and cereals Rice [...] […] Estimated Expenditure Value Discrepanci es

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. 15 Estimation of BH Expenditures Code Name Indicator name MORES Template Rice 2 2 Extrapolation Estimated Expenditure for Splitting Approach Sour ce name Year Value Unit # # Code

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. 16 Final Expenditure Values Code Heading Expenditure Value GDP Classification Gross Domestic Product Individual Consumption Expenditure by Households Food and non-alcoholic beverages Food Bread and cereals Rice [...] […]

17 Complete column 3 of sheet 1 with whatever aggregate estimates are available 1 1 Apply 5 approaches 2 2 GDP Classification Codes Classification Headings Names Initial Expenditures Values (GDP and main uses) Basic heading values estimated using the proposed 5 approaches Discrepancies (3)-(4) Column 4 of sheet 1 receives expenditures values from sheet Discrepancies between columns 3 and 4 appear under column Make adjustments to resolve discrepancies From 2 to or Read results if discrepancies solved 1 1 Sheets

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Completing MORES - Example 19 Step 1 ICP CodeHeading Initial Expenditure Value Estimated11 Expenditure Values Discrepancies GROSS DOMESTIC PRODUCT INDIVIDUAL CONSUMPTION EXPENDITURE BY HOUSEHOLDS FOOD AND NON-ALCOHOLIC BEVERAGES FOOD Bread and cereals Rice Other cereals, flour and other products Bread Other bakery products Pasta products Complete Table1 with whatever aggregate estimates are available.

Completing MORES - Example 20 Step 2 Name#Indicator NameSource NameYearValue Rice1Sales of RiceRetail Census Population increase from 2007 to 2011Population Census % Please indicate all the approaches used in calculation of expenditure for this basic heading. Enter a number (1- 5). 3CPI price increaseCPI % 4Adjusted expenditure for rice (1,2,3) Extrapolation5 Summation of adjusted basic heading values under "bread and cereals" Expenditure for "bread and cereals" subgroup Household Expenditure Survey Population increase from 2009 to 2011Population Census % 8CPI increase for this subgroupCPI % 9 Adjusted expenditure for "bread and cereals" (6,7,8) Estimated expenditure for Complete Table 2 for each basic heading using five splitting approaches.

Completing MORES - Example 21 Step 3 ICP CodeHeading Expenditure Value GROSS DOMESTIC PRODUCT INDIVIDUAL CONSUMPTION EXPENDITURE BY HOUSEHOLDS FOOD AND NON-ALCOHOLIC BEVERAGES FOOD Bread and cereals Rice Other cereals, flour and other products Bread Other bakery products Pasta products Table 3 will be automatically filled once discrepancies between aggregate figures and summation of BHs have been resolved.

ApproachCount 1Direct estimation108 2Extrapolation20 3Borrow per capita value8 4Borrow structure13 5Expert opinion40 total189 IndicatorCount 1CPI45 2Government final accounts34 3Population Census30 4Expert opinion29 5Household Expenditure Survey24 Summation of frequency of major indicators indicators were used and five major indicators account for 46% (162 out of 351). 22

Fictitious country case statistics 23 Number of sources Case study counts Individual consumption expenditure by households 2013 Individual consumption expenditure by NPISHs 11 Individual consumption expenditure by government 81 Collective consumption expenditure by government 11 Gross fixed capital formation 85 Changes in inventories & net acquisitions of valuables4 3 Balance of exports and imports3 1

Multiple Approach Examples 24 Name Indicator NameSource NameYearValue Out-patient paramedical services1Total outpatient services Government final accounts Proportion of paramedical servicesExpert opinion201125% 1Direct estimation5 5Expert opinion6 Estimated expenditure for Name Indicator NameSource NameYearValue Actual and imputed rentals for housing1Expenditure value for 2008Rental survey Rents increaseCPI201111% 3Actual rentsOwn-estimation Number of dwellings (no change in the number of dwellings since 1996)Population Census Extrapolation5 Ratio of average rent to household income Structure of a neighboring country201122% 4Borrowing structure6Annual household income Government statistics Imputed rentsOwn-estimation Estimated expenditure for

Issues 25 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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