Comptes nationaux

Annual National Accounts: Frequently Asked Questions (FAQs)

 

  

1. What is a GDP? Why do you propose three GDP? What are the different components of GDP?

2. Why does no GDP at market prices by industries exist?

3. When are the annual national accounts revised? How large are the revisions?

4. What is the difference between current and constant prices?

5. For countries that adopted the euro, how do you convert data?

6. What is the difference between government debt, government budget/deficit and government net lending/net borrowing?

7. Are the annual national accounts only composed of GDP?

8. Where can I find households savings and households indebtedness?

9. Do you have data prior to 1980?

10. Do you have a higher frequency than annual data such as quarterly or monthly?

11. Why are there two breakdowns for value added, compensation of employees, wages and salaries and employment?

12. What is the 2008 SNA? How did the change from SNA 93 to SNA 08 affect the main aggregates? What are the main differences?


 

1. What is a GDP? Why do you propose three GDP? What are the different components of GDP?


Gross Domestic Product is the standard measure of the value of final goods and services produced by a country during a period. GDP is the most common used indicator to compare economic performance across countries or relatively to other data. It combines in a single figure all the production (also called output) carried out by all the firms, the non-profit institutions, government bodies and households in a given country during a given period, regardless the type of goods and services produced, provided that the production takes place in the country's economic territory. Though it is a good indicator to capture production, it is not a good measure of societies' well-being.

GDP at market prices can be measured in three different ways:

  • As output less intermediate consumption (i.e. value added) plus taxes on products [such as Value Added Tax (VAT)] less subsidies on products;
  • As the income earned from production, equal to the sum of: employee compensation; the gross operating surplus of enterprises and government; the gross mixed income of unincorporated enterprises; and net taxes on production and imports (VAT, payroll tax, import duties, etc., less subsidies);
  • Or as the expenditure on final goods and services minus imports: final consumption expenditures, gross capital formation, and exports less imports. 

 

2. Why does no GDP at market prices by industries exist?


GDP is valued at market prices (as paid on the market by the purchaser) on the whole economy (S1), therefore it includes taxes less subsidies on products (mainly VAT paid by the purchaser). The quality of data and sources on taxes are very good on S1 but their detail across industries and institutional sectors isn't.

Value added is reported at basic prices, i.e. excluding taxes less subsidies on products, so it can be split among industries and institutional sectors.

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3. When are the annual national accounts revised? How large are the revisions?


EU countries usually publish the main aggregates between February and April. More detailed breakdowns are reported in October.  Fixed assets broken down by industry and product type are released after 24 months.

Non-European OECD countries loosely follow this schedule: Japan releases data in February, Turkey in April, Mexico and New Zealand in May, Chile and Korea in June, Canada and USA in September and Australia at the end of the year.

The data are revised on a regular basis, usually two or three times a year. In general, revisions depend on the national statistics institutes’ changes or adjustments. Revisions mainly concern the latest three years and reflect readjustments of previous estimates.

Besides the regular adjustment of data, exceptional revisions can occur, for instance due to changes in methodologies or sources. If this is the case, the OECD incorporates the new data into a blank version to clearly distinguish the new version from the old one. This may also lead to a reduced coverage of the time period until the country is able to submit historic data in accordance with the new methodology.

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4. What is the difference between current and constant prices?


At current prices, physical quantities are reported at a time in the year, and evaluated by the prices of this particular year.

Across time, GDP value can be affected by quantities and price changes. The drawback of this measure is that it can give the false impression that quantities have changed during the year, while in reality it was due to a change in price (or inflation).

 

The constant prices (or volume) estimates on the other hand will give a better idea of the GDP volume (quantity) on the entire period.

Two measures of volume estimates, constant prices and chain linked estimates, are usually used to compare values across countries and over the time.

The constant prices use the price structure of a reference year, so that it eliminates the inflation changes and allows the analyst to concentrate on the volume of production alone. This is why usually volume data are used for comparisons across the years.

 

Chain link estimates are more accurate than constant prices because they use the previous year price structure (and thereby being closer to the prices structure of the studied year).  The only problem with chain link estimates is that the additivity is lost and it cannot be conceptually used on transactions presenting positive and negative data (such as stocks data). The chain link estimates was recommended by  the System of National Accounts 2008 (SNA 2008).

In the database, the volume measure depends on the country's submission to the OECD. All OECD member countries present chained link estimates with the exception of Mexico which releases constant prices. A country note gives details about the method, reference year etc. of the particular country, and is accessible by clicking on the next to the country’s name.

Each country has its own national reference year. It varies from one country to the other. By selecting the measure "V", users receive the national reference year. To ascertain comparability, the measure "VOB" displays all data at the same OECD reference year, which is currently 2010.

Referring to "Real GDP" growth is a misuse of language: when referring to "real" indicator/growth, one usually talks about income-related indicators, for which the volume (physical quantities and prices) does not make any sense. In this case another deflator than the one of the GDP  can be used, for instance the deflator of  domestic demand or final consumption demand. 

The most important is the distinction between current and constant measures. This distinction is made by referring to real or chain linked estimates.

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5. For countries that adopted the euro, how do you convert data?


National data are expressed in Euros for all member countries of the European Monetary Union (EMU).

Data relating to years prior to entry into the EMU have been converted from the former national currency using the appropriate irrevocable conversion rate, defining the euro on 1st January 1999 (2001 for Greece, 2009 for Slovak Republic etc…). The irrevocable conversion rates can be found on www.ecb.int/euro/intro/html/index.en.html

The method facilitates comparisons within a country over time and ensures that the historical evolution (i.e. growth rates) is preserved. However, pre-EMU euros are a notional unit and are not normally suitable to form area aggregates or to carry out cross-country comparisons.

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6. What is the difference between government debt, government budget/deficit and government net lending/net borrowing?


General government constitutes a very important institutional sector including central government, local authorities and the social security funds.

Public deficit: corresponds to "net lending/net borrowing of general government". When the item is negative, it is a public deficit (net borrowing) and when positive, a public surplus (net lending). Deficit (/surplus) corresponds to flows data.

 

Public debt: represents the amount of public debt on the balance sheets of general government, which is stock data. Debt is a commonly used concept, defined as a specific subset of liabilities identified according to the types of financial instruments included or excluded. Generally, debt is defined as all liabilities that require payment or payments of interest or principal by the debtor to the creditor at a date or dates in the future. Consequently, all debt instruments are liabilities, but some liabilities such as shares, equity and financial derivatives are not debt [System of National Accounts, 2008, par. 22.104]. At the OECD, the concept of debt is the one of 2008 SNA definition. This definition differs from the definition of debt applied under the Maastricht Treaty for European countries.

 

Public expenditure: corresponds to total actual expenditure, meaning monetary payments made by general government. This transaction is widely used to measure the size of the role played by general government in the national economy.  This information is available in different place in OECD database under different codes:


Details of government expenditure by function (called COFOG) can be found at the following links :

  

Total taxes and social contributions: this transaction is similar to the previous one, but it is measured by general government revenue and not expenditure. As its name indicates, it reflects the taxes and actual contributions (in other words, not including imputed contributions) that households and firms must pay to various parts of general government.

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7. Are the annual national accounts only composed of GDP?


Many other transactions besides the GDP and its components are reported in ANA. You may also find other data such as: 

 

All those data are compiled into a unique framework (SNA 93-08), which make them fully comparative at the international level:

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8. Where can I find households savings and households indebtedness?


Household's savings:

Net saving is a balancing item of the households institutional sector that reports the difference between the net disposable income of households and final consumption expenditures. Gross saving is used to acquire financial and non-financial assets.

 

Households' net lending/net borrowing represents the amount available for the purchase of financial assets or debt repayment. It is almost always positive for HH sector. It is sometimes also called the "Financial saving". 


Households debt: The concept of debt is the one of 2008 SNA definition. Debt is obtained as the sum of the following liability categories, whenever available / applicable in the financial balance sheet of the institutional sector: currency and deposits (AF2), securities other than shares, except financial derivatives (AF33), loans (AF4), insurance technical reserves (AF6) and other accounts payable (AF7). The OECD publishes an indicator showing the stock of debt obtained from the financial balance sheet of Households and NPISHs sector (S14+S15) as a percentage of its gross disposable income.  For the households sector, liabilities are essentially made up of loans, and more particularly of house purchase loans.

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9. Do you have data prior to 1980?


OECD publishes long time series of GDP as from 1970 for most of the countries.

Some projections are also computed. They can be found in the OECD Economic Outlook

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10. Do you have a higher frequency than annual data such as quarterly or monthly?


Quarterly national accounts are accessible on http://stats.oecd.org/Index.aspx?DataSetCode=QNA

Monthly GDP and other monthly national accounts data are not available.

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11. Why are there two breakdowns for value added, compensation of employees, wages and salaries and employment?


All OECD countries provide now their series by activity according to ISIC rev 4 classification, whereas they used to provide them according to ISIC rev3. Series in ISIC rev 4 include a "V" in front of the ISIC letter code and the title of the transaction/series.

Since some countries publish data in more detail or for a longer time period, there is also an archive for analysts wishing to use the ISIC rev 3 breakdown. 

These two ISIC classifications and their correspondence are available on UNSD web site:

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12. What is the 2008 SNA? How did the change from SNA 93 to SNA 08 affect the main aggregates? What are the main differences?


The 2008 System of National Accounts (SNA 2008) is a statistical framework that sets international standards for the recording of economic activity within a country to ensure the comparability of national accounts across countries. It has been produced, in 2009, by the United Nations Statistical Commission, the European Commission, the Organisation for Economic Co-operation and Development, the International Monetary Fund and the World Bank Group. The 2008 SNA replaces the 1993 SNA and has been updated to adjust to changes in the economic environment and research. Further information can be found here.

The SNA 08 introduced 44 conceptual changes and 29 clarifications to the system of national accounts. However, only a few of these changes have a significant impact on the GDP, the two biggest one concerning the treatment of research and development and the military weapon system.

In 2008 SNA, Research and development is no longer recorded as intermediate consumption but treated as investment (also referred to “gross fixed capital formation” in the SNA), being part of the gross capital formation. Due to this change, the GDP level of the OECD Member countries rose on average by 2.2%.

Military weapon systems are also recorded as part of the gross fixed capital formation instead of intermediate consumption. This change led to an increase of the GDP level of the OECD Member countries on average by 0.3 %.

Some other changes concern the recording of pension entitlements, exports, and the inclusion of illegal economic activity in national accounts.

All OECD Member states compile their accounts according to the 2008 SNA, with the exception of Chile, Japan and Turkey, which are currently using the 1993 SNA and will adopt the new methodology in 2015 and 2016. Further information can be found here.

 

Further information on the SNA 2008 and its impact on national accounts can be found here:

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