1 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March MEASURING THE GROSS REGIONAL EXPENDITURES (GRDE) IN THE PHILIPPINES by VIVIAN R. ILARINA National Statistical Coordination Board Philippines International Workshop on Regional Products and Income Accounts Beijing China, March 2010

2 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March I.Introduction a. Brief History b. Salient Features of the Present GRDE c. Compilation Process II. The Gross Regional Domestic Expenditures a. Scope and Coverage b. Sources of Data c. Estimation Methodology d. Measurement Issues III. Way Forward Outline of the Presentation

3 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March A.Brief History The Philippine System of National Accounts (PSNA) The has been continuously compiled for almost 63 years now which started in 1947 – for the annual national accounts and in 1983 for the quarterly national accounts; The National Statistical Coordination Board (NSCB) which is task with the compilation of the PSNA has started development of the GRDE in 1987 – much later after the start of the GRDP in 1971; I. Introduction

4 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March is also a milestone in the PSNA as this starts the regular publication of the GRDE on an annual basis; The first release of the GRDE was at base year 1972 and an overall revision / rebasing of the GRDE was undertaken in 1990 with the shift of the base year to 1985 and improved estimates.

5 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March B. Salient Features of the Present GRDE The GRDE is intended to complement the current series of the GRDP to be able to provide measures of the regional economy at the production and expenditure sides of the national accounts; While the compilation of the GRDE started in 1987, this is still in its developmental stage since the NSCB is constantly improving the GRDE by coordinating with various agencies for the improvement of data support for this set of accounts;

6 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March The present GRDE is at base year 1985; still follows the recommendations of the 1968 UNSNA; The 2009 GRDE publication is covering the period 2006, 2007 and 2008; The GRDE has a lag time of one year – that is, data becomes available in the publication after one year; The GRDE release is first week August of each current year.

7 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March C. Compilation Process of GRDE 1.The GRDE starts from the national level estimates. GDP at the expenditure side is compiled as : 1. Personal Consumption Expenditures (PCE) Plus 2. Government Consumption Expenditures (GCE) Plus 3. Gross Domestic Capital Formation (GDCF) a. Fixed Capital a.1. Construction a.2. Durable Equipment a.3. Breeding Stocks b. Changes in Stocks Plus 4. Exports a. Merchandize Exports b. Non-Merchandize Exports Plus 5. Imports a. Merchandize Imports b. Non-Merchandize Imports EQUALS EXPENDITURES ON GROSS DOMESTIC PRODUCT

8 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March For the Gross Regional Domestic Expenditures, the following are estimated separately by region namely: 1. Personal Consumption Expenditures (PCE) 2. Government Consumption Expenditures (GCE) 3. Construction 4. Durable Equipment 5. Breeding Stocks, Orchard Development & Afforestation

9 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March The rest of the expenditure items below are estimated as residual : 1. Exports 2. Imports and 3. Changes in Stocks The residual estimates also includes the statistical discrepancy between the production and the expenditure sides of GDP. The GRDE starts with the national estimates as control total and these are allocated among regions using appropriate regional indicators.

10 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March THE COMPILATION OF THE GRDE a. Scope and Coverage (operational) b. Major sources of data c. Estimation Methodology d. Some Measurement Issues II. The Gross Regional Domestic Expenditures (GRDE)

11 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March Personal Consumption Expenditures a.Scope and Coverage: - includes the final consumption expenditures of individual households, institutional households, and private non-profits institutions serving households. b. Source of data: Family Income and Expenditure Survey (FIES) by region which is conducted by the National Statistics Office (for benchmark estimates)

12 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March PCE is classified by item of expenditures namely: 1. food 2. beverage 3. tobacco 4. clothing and footwear 5. fuel, light and water 6. household furnishings 7. household operations 8. transportation and communications 9. miscellaneous expenditures like medical and health expenses, personal care, etc.

13 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March c. Estimation Methodology: Benchmark : Regional distribution of total expenditures from Family Income and Expenditure Surveys (FIES) – serves as indicator to allocate national level estimates. Annual: trend extrapolation of regional estimates resulting from modified commodity flow method by region using indicators used on production coming from the GRDP.

14 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March Deflator: Consumer Price Index by region (average of all items for each region) d. Measurement Issues: The estimation of PCE at the regional level pose limitations for the replication of the methodology used at the national level because of the unavailable data for regional estimates. It is assumed that the distribution of the final expenditures of NPISH is the same as the household expenditure distributions.

15 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March General Government Consumption Expenditures a. Scope and Coverage: includes central (or national) government; local government and social security agencies b.Sources of data: a. For national and local govt - financial report from the Commission on Audit (COA) b. For social security agencies – financial report from the Social Security System (SSS) and the Government Service Insurance System (GSIS)

16 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March d.Estimation Methodology: Regional for government consumption expenditures are coming from the Commission on Audit (COA). When data are not available from COA, data on regional program of expenditures from the Department of Budget and Management (DBM) are used. Deflator: Average Earnings Index – computed at national level is the same index used for all regions. CPI by region for maintenance and operating expenses.

17 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March Construction a. Scope and Coverage: Classified into public construction and private construction; - Public construction - are construction done by national government, local government, and government corporations; - Private construction - are residential construction and non-residential construction

18 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March b. Sources of data: 1. For public construction – annual financial reports from Commission on Audit; the Budget of Expenditures and Sources of Financing (BESF) of the Department of Budget and Management (DBM) 2. For private construction – report on building permits compiled by the National Statistics Office (NSO)

19 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March c. Estimation Methodology: 1. Regional public construction - Estimated only for physical accomplishment of contruction put in place; 2. Regional private construction – Estimates for residential and non-residential; used the S-curve to estimate percentage distribution of physical accomplishments for the period. Deflator: Regional CPI for housing and maintenance provides the regional differentials applied to the composite price index at the national level.

20 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March d. Measurement Issues: 1. Regional allocation of the sectors output among regions is based on indicator of regional distribution as estimated from the gross valued added of public and private construction; 2. Undercoverage for private construction which is based from building permits is assumed to be uniform across regions because there is no data currently available to estimate the undercoverage ratio by region. 3. For public, the national deflator used is used for all regions.

21 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March Durable Equipment a. Scope and Coverage: -consists of outlays for new and used capital goods such as machinery and equipment acquired by all resident producers less sales or transfers of used capital goods; - covers machinery specialized for particular industries, general industrial machinery and equipment, transport equipment and miscellaneous equipment.

22 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March b. Sources of data: For imports of durable equipment – foreign trade statistics compiled by the National Statistics Office (NSO); For domestic production – census and survey of establishments conducted by the National Statistics Office (NSO).

23 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March c. Estimation Methodology: 1. Regional indicators are obtained from the regional pattern of expenditure on equipment are resorted which are generated from the establishment census and surveys. Deflator – the same deflator is used for national estimates and regional estimates which is the Wholesale Price Index. 2. This assumes that for most capital goods price determination is more a function of the uniqueness of the equipment rather than its geographical placement.

24 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March d. Measurement Issue: The commodity Flow Method as applied at the national level estimate can not be used at the regional estimates since available data for the region can not fully support the methodology.

25 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March Breeding Stocks, Orchard Development and Afforestation a. Scope and Coverage: - Breeding Stocks: refer to outlays on livestock and poultry raised as breeders, draught, milking, layers; - Orchard Development: refers to outlays on the cultivation of plantations until they become productive; - Afforestation : cultivation of forest trees in newly created forest areas.

26 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March b. Sources of data : 1. Bureau of Agricultural Statistics – for data on inventory of livestock and poultry; cost of production studies on total cost per hectare for the development/main- tenance of plantations; 2. National Statistics Office – from the Census of Agriculture, data used are ratios of animals used as capital formation and data on total areas devoted to permanent crops.

27 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March c. Estimation Methodology Breeding Stocks 1. Estimates makes use of indicators on regional data on inventory and regional prices used for breeding stocks, milking, laying and work animals. 2. The regional ratios to determine the number of animals used for capital formation are based on the Census of Agriculture. Deflator - Regional farm gate prices for each type of animals

28 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March Estimation Methodology: Orchard Development a. Estimates makes use of indicators on regional data on the distribution of value of production of major plantation crops. Measurement Issues: a. Regional distribution follows the gross value added by region.

29 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March Estimation Methodology Afforestation a. Estimates makes use of indicators on regional data on expenditures incurred by private enterprises and government as reported by the Forest Management Bureau (FMB) Deflator Regional cost per hectare reforested translated into an index.

30 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March Changes in Stocks - Stocks includes: (a)Materials & Supplies (b)Work-in-progress (c)Finished Goods (d)Goods for Resale

31 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March a. Scope and Coverage: Changes in Stocks AgricultureNon-AgricultureGovernment Rice Corn Sugar Crude Petroleum Products Trade Manufacturing / Other Establishments National Local Govt Corporations

32 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March a.Bureau of Agricultural Statistics (BAS) - data on quarterly volume of production and inventory of rice and corn at the beginning of each month, wholesale prices of rice and corn b. Sugar Regulatory Board (SRA)- data on quarterly production, imports, exports, consumption and prices of sugar c. Foreign Trade Statistics (FTS), NSO- Exports and Imports of Rice and Corn d. Department of Energy (DOE)- monthly inventory and prices of crude and petroleum products e. Commission on Audit (COA)- annual data on inventories of national, local government and government corporations b. Sources of data :

33 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March Regional estimates are done separately for the agriculture and non-agriculture sectors. 2. Agriculture estimates used as regional indicators the stocks held by households, commercial and National Food Authority 3. Non-agriculture estimates used as regional indicators the inventory held by industrial and non-industrial sectos particularly the finished goods held by manufacturing, mining and quarrying establishments. c. Estimation Methodology:

34 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March Agricultural inventory – by farm gate prices Non-agricultural inventory – by implicit price index at the national level and distributed into regions using as indicator the CPI. Deflator d. Measurement Issue: a.As in the case of durable equipment, estimates of changes in stocks for non-agricultural industries use the establisment based data and household stocks are not adequately captured.

35 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March Exports and Imports In the absence of regional trade flow, net exports is derived as a residual item. Hence, net exports refers to the combined effect of the income flows between regions, the commodity flows between regions and the rest of the world and the statistical discrepancy.

36 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March With the on-going Revision and Rebasing of the National Accounts, the present GRDE is also undertaking the same activities to consider the following for the release of the new GRDE series from 1998 to 2009: 1.Base Year New Classification Systems – - Philippine COICOP - Philippine PSCC 3.Adoption of the 1993 SNA concepts 4.Use of update data and parameters III. Way Forward

37 NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Regional Products and Income Accounts, Beijing, China VRIlarina/ March Thank you very much ! URL: