1. Why Economic Census is Important? - The case of National Income in Korea Why Economic Census is Important? - The case of National Income in Korea Kang, Changku Economic Statistics Department The Bank of Korea July 6, 2009

2. Outlines National Accounts in Korea ⅠⅠ Estimation of National Income ⅡⅡ ⅢⅢ 2 Conclusion Rebasing National Income Statistics 22222222222 ⅣⅣ

3. National Accounts in Korea ⅠⅠ 333333333333

4. 4 I. National Accounts in Korea Circular Flow of Income

5. 5 Relationships among Five sets of National Accounts Statistics I. National Accounts in Korea

6. 6 Equivalence of the three approaches Estimation Methodology Production-side National Income = Distribution-side National Income = Expenditure-side National Income In Korea, national income has for many years been essentially estimated using production approach method I. National Accounts in Korea

7. 7 Periodicity and Announced Contents I. National Accounts in Korea

8. 8

9. 9 Estimation procedure Collection of basic materials Estimation of national income from output approach (By commodity) Estimation of production-side national income (By industry) I. National Accounts in Korea

10. 10 Brief History of GDP statistics  In August 1957 - the BOK was designated as Korea's official institution to compile GDP statistics.  In 1958 - published the GDP statistics by kind of economic activity and expenditure on GDP during the period of 1953-57, according the 1953 SNA  In 1968 - starts to publish quarterly GDP to meet the increasing demand for short-term economic indicators I. National Accounts in Korea

11. 11  In 1989 - consolidates GDP statistics and Input-Output tables, according to the 1968 SNA  In 2004 - The BOK had revises GDP statistics on the basis of the 1993 SNA recommendations  In 2009 - rebasing from 2000 to 2005 - adoption of the annual chain-linking method - expenditure component measured directly - updated classification of GDP by industry I. National Accounts in Korea Brief History of GDP statistics (continued)

12. Estimation of National Income ⅡⅡ 12

13. 13 Quarterly and Annual GDP  In general, VA is made by the method to deduce the value of intermediate input from the value of output  In some cases, VA is made by the method to extend the VA of the same period of the previous year with rates of change in real output during the relevant period  In public administration and national defense, widely different from other economic activities, VA is estimated first by applying the quarterly performance ratio to relevant item on the government’s budget document. - And the value of output is found later by adding up intermediate input and VA II. Estimation of National Income

14. 14 Quarterly GDP (Data Sources) II. Estimation of National Income Name of MaterialInstitution in Charge Collectio n Period Major Contents Industrial Production Index KNSOMonthlyProduction, shipment, inventory index by item Service Industry Activity Index KNSOMonthlyInformation at each service industry Producer Price IndexBOKMonthlyOutput deflator, Intermediate input deflator Consumer Price IndexKNSOMonthlyIndex by each item Crops StatisticsMinistry of A. & F. QuarterlyCultivation area Livestock StatisticsMinistry of A. & F. QuarterlyNet increase …………

15. 15 Annual GDP (Data Sources) II. Estimation of National Income Name of MaterialInstitution in Charge Collection Period Major Contents Mining and Manufacturing Survey Report KNSOThe following year Production amount by item; Major production cost External Trade Estimate of National Tax Service NTSThe following year Sales amount, cost of sales, VA items, etc Report on the survey of wholesale and retail trade KNSOThe following year Sales amount, cost of sales, VA items, etc Service Industry SurveyKNSOThe following year Information at each service industry …………

16. ⅢⅢ 16 Rebasing National Income Statistics 16

17. 17 Ⅲ. Rebasing National Income Statistics  Changing Reference year - reflect recent economic conditions - improve the quality of statistics  Main Changes - More relevant data (census data) are used - VA ratio, intermediate input ratio - time series are changed

18. 18 Ⅲ. Rebasing National Income Statistics  Changes reference year from 2000 to 2005 - done for 1 st step on May in 2009 * will finish until 2009 - Manufacturing * reflect 2005 I/O table result - Wholesale and retail trade * the nominal margin, VA ratio - Housing Services * reflect 2005 Housing Census * change the level of stratification( 2 step  4 step)

19. 19  Revision result of Nominal GDP (Old vs. New) - mainly reflect the census result - changed estimation method, reflect new products YearNew (A)Old (B)(A – B)(A-B)/B 2000603.2578.724.54.2 2003767.1724.742.45.9 2005865.2810.554.76.7 2007975.0901.273.88.2 Ⅲ. Rebasing National Income Statistics Result of Nominal GDP (Old vs. New) (trillion won, %)

20. 20 Conclusion 20 ⅣⅣ

21. 21 Ⅳ. Conclusion  The census data are important in National Accounts - estimation of GDP is based on the survey data - rebasing work is based on the census result - build the foundation of GDP every 5 years  Consistency issues - regular frequency (5 year?) - consistent with census and yearly survey * conduct yearly survey continuously?

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