Archive:National accounts at Eurostat
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- Published in Sigma - The Bulletin of European Statistics, 2008/03
Eurostat produces a wide variety of national accounts data. This article deals with their two key parts: the so-called main aggregates and sector accounts. Sigma asked three Eurostat experts — Roberto Barcellan, Ingo Kuhnert and Denis Leythienne — to explain the key concepts and procedures behind the national accounts production at Eurostat.
Introduction
The main aggregates, covering the annual and quarterly gross domestic product and its components, are among the most significant indicators of the state of any economy, be it at a national or European level,’ began Ingo Kuhnert, team leader in charge of production of main aggregates at Eurostat.
‘Indicators like GDP, household private consumption, government consumption expenditure, investments, exports, imports, employment, gross national income and gross disposable income are the key headline figures of interest to us,’ said Roberto Barcellan, Head of the National Accounts Production Unit.
‘We inform our users on the growth of individual European economies but also that of the European Union and the euro area as a whole. Our figures go beyond the key macroeconomic aggregates and are complemented by detailed breakdowns by industries (agriculture, manufacturing and services) and data on household consumption by functions.’
‘They also offer a view of the economy through the perspective of institutional actors (such as households, public sector, financial and non-financial corporations) and a detailed overview of production aspects through supply, use and input-output tables. And finally, the overall picture is completed by regional accounts.’
Mr Barcellan told Sigma that maintaining full consistency between the different fields was one of the challenges the statisticians dealing with the compilation of national accounts had to face every day. An additional problem while compiling the European national accounts was maintaining consistency between the figures used for compiling European aggregates and the statistics provided by individual European countries.
‘Furthermore, national accounts have an area of overlap with other fields such as employment and demographics,’ Mr Kuhnert added. ‘Although not part of national accounts, they supply us with important information relating to, for instance, value added and output, resulting in important indicators such as labour productivity or GDP per head. In order to ensure the consistency of definitions we include them in our data collection.’
The team led by Mr Kuhnert produces the key macroeconomic national accounts figures based on the analysis of two different sets of data — those collected for a quarterly round-up (quarterly main aggregates, or QNA) and the yearly compilation (annual accounts or, ANA).
Annual versus quarterly aggregates
‘In theory, one could say that the data used to produce both the quarterly and annual aggregates should be the same,’ said Mr Kuhnert. ‘In practice, the differences in the source data can make the compilation of the quarterly accounts substantially different from the annual one.’
According to Mr Kuhnert, data used for the compilation of annual aggregates are generally seen as more ‘reliable’, because the compilers can use data from annual surveys, usually more detailed and accurate, without the extraordinary timeliness pressure encountered in the compilation of the quarterly aggregates.
In view of this, there is a difference in the types of users of QNA and ANA. ‘The “typical” QNA user is a market analyst, forecaster or a short-term economic and monetary actor, assessing the state of the current business cycle,’ said Mr Kuhnert. ‘The ANA user, on the other hand, is either an analyst researching changes in the structure of the economy or a politician. However, all users expect annual and quarterly accounts to tell a consistent story.’
Mr Kuhnert explained that the main aggregates data were often used in conjunction with other domains of official statistics. ‘Thus, quarterly accounts “go well” together with figures on unemployment, industrial production or inflation to form an image of the economic state of the business cycle. Annual accounts, on the other hand, are well complemented by social and demographic data, to form an image of the economic state of a society,’ he explained.
Sector accounts
‘Within national accounts, sector accounts make the link between transactions and their impact on the income and wealth of economic agents that are grouped together in the so-called institutional sectors,’ said Denis Leythienne, team leader dealing with sector accounts.
‘For instance, a family may be renting out their real estate, which will be recorded as production of housing services. As part of their revenue, their wages may be complemented by social transfers from the state such as family allowances. On the expenditure side, this family is likely to pay taxes and social contributions as part of their wages, and interest on their mortgage payments.’
Mr Leythienne said that such transactions, leading to an increase or decrease of the income of economic agents, are what the sector accounts deal with.
According to Mr Leythienne, families are seen as part of the household sector whose main role in the economy is to consume goods and services and contribute with savings to the financing of investments in their own (e.g. renovating their property) and other sectors (i.e. corporate buildings, machines). This is done through the intermediation of banks.
‘Apart from households, other sectors include non-financial corporations (enterprises producing goods and non-financial services), financial corporations (producing financial services) and government,’ said Mr Leythienne. ‘This classification covers all economic agents, thus allowing a total description of any given economy as a whole.’
Transactions which take place between the whole economy of a country and other agents abroad are recorded in a special account called ‘rest of the world’, whose main data source is the balance of payments statistics.
Use of sector accounts
‘To start with, sector accounts allow analysing how developments in income may impact on expenditure and then general economic growth,’ said Mr Leythienne. ‘They shed light on the economic behaviour of the players grouped in sectors. One key indicator derived from sector accounts is the household saving rate that measures the share of disposable income that had been saved. The spending/saving “mood” of households gives an indication of their level of confidence in the economic situation of the country.’
Mr Leythienne explained that sector accounts are also instrumental in analysing relations between different sectors of the economy. ‘They help answer some of the crucial questions of today, from the influence the governmental tax policies have on various economic agents to the impact of interest rate rises by the European Central Bank on business investment,’ he said.
European sector accounts
‘Together with the European Central Bank, Eurostat has developed a system of European sector accounts, which have been available on a quarterly basis since June 2007,’ commented Roberto Barcellan.
The euro area and the European Union accounts are based on the national accounts of the Member States. ‘Generally speaking, we start by taking the accounts of the Member States, European institutions and bodies and add them together,’ explained Mr Leythienne. ‘We then eliminate the cross-border transactions between EU countries (the so-called “intraflows”) from the “rest of the world” accounts. Finally, we remove any imbalances caused by the removal of intra-flows (“asymmetries”) in order to re-balance the accounts.’
‘In doing so, we obviously work very closely with the main aggregates’ team within our unit, but also with the ECB and a number of other Eurostat units,’ said Mr Leythienne. ‘Here, we rely in particular on colleagues from the International Trade Statistics Unit, the Balance of Payments Unit and the Validation of Public Accounts Unit.’
The institutional sector accounts information is complemented by the financial data derived from the financial sector accounts, as compiled by the ECB and Eurostat. ‘For example, the joint financial and non-financial sector accounts data shed light on the way savings are invested in the different financial instruments and how this impacts on the economic wealth of each sector,’ pointed out Mr Leythienne.
Regular news releases
The data produced by Eurostat are published at regular intervals in the form of news releases. ‘The first one is the GDP flash, which comes out 45 days after the end of each quarter,’ said Mr Barcellan. ‘It is the very first picture of the state of the European economy and has, as you can imagine, a very powerful effect on the international media.’
The main aggregates are then published 60 days after the end of the quarter, followed by the third news release, put together 100 days after the end of the quarter. ‘In addition, we release the employment figures 75 days after the end of each quarter and have a quarterly sector accounts news release at 120 days,’ said Mr Barcellan.
Future prospects
‘At the moment, we are working on improving the quality and timeliness of our figures,’ Mr Barcellan remarked, ‘with the aim to increase the reliability and accuracy of the published data and to cut down the time needed for the publication of news releases relating to the quarterly national accounts.’
According to Mr Barcellan, the instruments used to achieve these targets are the exchange of data and metadata related to national accounts and best compilation practices between different countries, the improvement of the methodological harmonisation in areas such as revision policy and seasonal adjustment, and the actions aimed to strengthen the links between basic statistics and national accounts.