! Why are National Accounts important?
National accounts are the main tool for measuring the general economic situation of a country. Estimation of national accounts is based on the methodology of the European System of Accounts (ESA 95, ESA 2010). They are used by economic, social and political subjects who find in them important information for their decisions; moreover, they are a reference for the media, companies and academics
! What is the European System of Accounts ESA 2010?
European system of national and regional accounts is the framework for measuring the economic and financial activities of an economic system, its components and their relations in a given time period (usually a year or a quarter period). Transactions by economic agents in their relations with other entities resident or non-resident in the economic territory are subject to measurement.
! What is GDP and how is it measured?
Gross domestic product (GDP) is one of the indicators of national accounts. It represents the total cash value of all goods and services produced over a specific period of resident producer units. Measuring GDP is a complicated process, but basically its estimation can be done with three methods:
GDP is the sum of gross added value of the various branches of the economy adding taxes and deducting any subsidies on products.
Under this method, GDP is the sum of the final uses of goods and services by resident institutional units (actual final consumption, gross capital formation and change in inventories balances), plus exports, minus imports of goods and services.
GDP is the sum of uses in the generation of income account of the overall economy (compensation of employees, taxes on production and imports without aid, gross operating surplus and mixed income of the economy in general).
! What are the data sources for annual GDP?
For the estimation of GDP it is used information provided by various statistical and administrative sources. The data used could be a statistical production (various surveys) conducted by INSTAT or other national institutions such as ministries, the General Directorate of Taxes and Customs, the National Business Centre, Bank of Albania, Financial Supervisory Authority and others.
! What is the estimation of GDP by current prices?
All economic transactions are the result of the calculation of various quantities of products and production and sales prices. By summing all given transactions it is calculated the total value for an assigned period. When the values of the two periods are compared, they also will be reflected both in price and in quantity. These values are expressed in current prices.
! What is the estimation of GDP by constant prices?
With time the overall level of prices changes (increase or decrease), which leads to change (increase or decrease) in current values, even if the volume of goods and services remained unchanged. To avoid the impact of changes in prices the estimation is done at constant prices. Constant prices are obtained by the combination of the quantities of products which are manufactured or sold in a longer period, with the prices of a given base period. In this way it is taken a series of comparable data, because all values are expressed in the prices of the base year.
! What is economic growth?
Economic growth occurs when the market value of products and services in an economy increases in a period compared with another period. Usually, economic growth is measured by examining the GDP of an economy. However, due to inflation, economists and analysts often prefer to measure economic growth through annual real GDP change and percentage change in GDP per capita. Real GDP growth shows how fast the economy is expanding, while GDP per capita shows the ability of its people to buy goods and services in that country. Inflation effect is eliminated in the calculation of economic growth, estimating so the amount of products and services produced in the economy during the given period.
! What is the difference between nominal GDP growth and real GDP growth?
Nominal GDP measures the value of the products for a certain period of time, the prices of the period in which the product is produced (current prices).
Real GDP measures the total output produced in an economy over a period of time, but considering the prices of a given base year, which could be the year before or a designated year as the base year.
Example: Assume that in 2011, the economy of a country produces 100 million ALL goods and services valued at prices of 2011. In 2012 the economy produces 110 million ALL goods and services valued at prices of 2012. The same goods and services are estimated at 105 million ALL in 2011. Then growth calculations are:
Nominal GDP 2011 = 100 million ALL
Nominal GDP 2012 = 110 million ALL, real GDP = 105 million ALL
Nominal GDP growth = Nominal GDP 2012 / nominal GDP, 2011 = 110/100 = 10%
Real GDP growth = real GDP, 2012 / nominal GDP, 2011 = 105/100 = 5%
! What is the difference between "real GDP growth" and "GDP volume growth"?
For GDP, both terms mean exactly the same thing, namely that part of change in nominal GDP that is not caused by price increases, but by increases in the quantity or quality of goods and services produced. "Volume growth" is a term usually reserved for production-related aggregates such as the GDP, for which physical quantity and quality can be directly measured and observed, at least in principle. "Real growth" is a wider term also used for income-related aggregates, which do not relate directly to an observable volume. The second method, widely known as "deflation", consists of dividing observed values of GDP with price indexes of the base year. Price indexes are calculated by evaluating the current year prices of the major contributors to the economy, with their prices in the base year.
! Annual GDP publication phases?
Estimation of annual GDP passes through several phases, from preliminary evaluation to the final annual GDP figure for a given year. The main purpose of this process is the improvement and completion of data sources so that calculations of GDP to be as much comprehensive as possible.
The first stage is the preliminary estimate of annual GDP for the year (t), by both methods, within eleven months after the end of the year (t+11) and is based on preliminary data sources of the annual Structural Business Survey and administrative sources.
The second stageincludes semi-final estimates of the annual accounts of the GDP for the year (t) within six months after the preliminary assessment (t+17). Semi-final calculations are based on data sources more complete and therefore almost entirely on direct methods.
The third stageincludes the final estimates of GDP for the year (t). In this third stage, when the data set of the year (t+1) is received, the data of the year (t) is reviewed once again in order to incorporate any changes made to the year (t) and to ensure the consistency of the two consecutive years. During this stage is performed the final balancing at product level between the two methods of GDP.
! Why can it happen for the economic indicators of the same year to change over time?
It is important for INSTAT to offer its products in time and to be reliable for all the users. To achieve this goal it is necessary to dismiss the information within a short period of time and especially to provide it to the users on the specified date. Even after the publication of the main economic indicators, other data become available to be used. This additional information improves the indicators of GDP and its components resulting in a continuous revision.
! What is Revision on data and why does it happen?
The published data are revised based on revision policies of the national accounts. Revisions reflect the aviability of new data and the methodological improvements as well. Revisions of annual time series is the result of three main reasons:
i. Incorporation of new statistical and administrative data sources;
ii. Improvement of statistical techniques and methods of national accounts data compilation;
iii. Changes in definitions, methods and classifications in international level, introduced by new System of National Accounts.
! Why a change in ESA?
Over the last twenty years, substantial changes have impacted economies: in particular the increasing role of ICT in the production processes, the growing importance of intangible assets, intellectual property products and services, and the globalization of markets.
Therefore the macroeconomic statistics needed an adaptation all over the world to the new context, resulting from the update of the United Nations System and the European System of Accounts.
! Are Esa2010 changes the same for all European countries?
The methodological changes in ESA 2010 must be adopted from all countries in Europe in order to follow the same regulations in recording national accounts. From September 2014 the data on national accounts are based on the concepts and principles of ESA 2010.
The update of national accounts is not a process only in European countries but for all in general. ESA 2010 is applied in Europe while for the rest of world there is 2008 System of National Accounts which is an update of SNA 1993 and its implementation has already begun in many countries like USA, Australia, Canada and New Zealand.
! Does GDP measure well-being?
The national accounts framework deliberately sets a "production boundary" to fix which activities are to be recorded in the accounts and which are not. Evidently, this production boundary cannot serve all analytical purposes equally well. Own-account production of certain services inside households for example is excluded, while the same services would be included were they produced by a service provider outside the household. Beyond the question of which activities are counted as production in the accounts, attributing monetary values to them will not necessarily coincide with the amount of "utility" actually derived from consuming them.
In consequence, GDP is not a comprehensive measure integrating all aspects that influence well-being of a society and was never intended to be one. It is an indicator of economic production which results in goods and services that potentially contribute to well-being.
! How to find data on GDP in Albania?
Data on GDP in Albania, presented in tables and different publications, can be found on INSTAT webpage. To access this information follow the link as below:
Time series and more detailed information can be found in our statistical database:
! What is the output?
Production is an activity carried out under the control, responsibility and management of an institutional unit that uses inputs of labour, capital and goods and services to produce outputs of goods and services. The total of products created during the accounting period is considered as output.
! What is Intermediate Consumption?
Intermediate consumption consists of goods and services consumed as inputs by a process of production, excluding fixed assets whose consumption is recorded as consumption of fixed capital. The goods and services are either transformed or used up by the production services.
! What is FISIM?
Some financial intermediaries provide services for which they don`t explicitly charge their customers. An example of these services are loans and deposits which the financial institutions offer interest rates for certain periods and in different currencies. The value of these financial intermediary services is indirectly measured and is abbreviated FISIM. FISIM is valued on the basis of the difference between the actual rates of interest on deposits and loans (respectively) of FIs and a reference rate of interest, multiplied by the respective stocks of deposits and loans.
! What is Imputed Rent?
Imputed rent is the rent considered to be paid by the owners of the dwellings if they are supposed to live in a rental dwelling. In the National Accounts, the output of housing services comprises not only the services produced by rented dwellings but also those services provided by owner-occupied dwellings. Without this imputation, a shift between rental and owner-occupied dwellings would have an impact on GDP. This is also relevant for international comparisons of GDP, which would otherwise be complicated by the differing levels of dwelling ownership across countries.
! What is an institutional unit?
The institutional unit is an elementary economic decision-making centre characterized by uniformity of behavior and decision-making autonomy in the exercise of its principal function. A resident unit is regarded as constituting an institutional unit if it has decision-making autonomy in respect of its principal function and either keeps a complete set of accounts or it would be possible and meaningful, from both an economic and legal viewpoint, to compile a complete set of accounts if they were required.
! What are institutional sectors?
The various protagonists of economic life are grouped in sets considered to be relevant. The so-called institutional units constitute the basic units of the national accounts The institutional sectors include the institutional units with similar economic forms of behaviour characterised by their main function and the nature of their activity.
There are five resident institutional sectors :
! Where can I find economic classifications with correspondence tables?
Most international and national classifications (NACE, COICOP, COFOG, ISIC, PRODCOM, CPA, CPC etc.) as well as correspondence tables for the various classifications are available at the following web pages:
United Nations site: UN Classification Registry.
! What is the statistical discrepancy?
National accounts are compiled from a large variety of sources with varying degrees of coverage and reliability. It is therefore not uncommon to arrive at different numerical values when calculating the same variable independently from different approaches. In these cases national accountants closely assess the reliability of the data sources. In a subsequent process of reconciliation, a single figure for the variable under consideration is arrived at. If the difference to the original values cannot be attributed to elements of the calculation, it is shown as a statistical discrepancy. Whether or not a statistical discrepancy is shown depends on the specific circumstances of the national accounts system and its data sources in each country.
! Which concept is used in Albania in order to calculate final consumption expenditure of households? Does final consumption expenditure of households of Albania include expenditure occurred abroad?
Consumption expenditure by Albanian resident households can take place either in Albania or the rest of the world. The consumption expenditure of Albanian residents, occurring in the rest of the world is regarded as an import of services to Albania. Correspondingly, consumption expenditure occurred in Albania by households resident in the rest of the world is regarded as an export of services for Albania in national accounts. Household final consumption expenditure in Albanian national accounts includes expenditure by resident households on the domestic territory and expenditure by resident households abroad, but excludes any non-resident households' expenditure on the domestic territory. Therefore, the final consumption expenditure by Albanian households is estimated after the so called "national concept".
! Why is final consumption expenditure of households calculated in constant prices?
The final consumption expenditure of households is estimated at purchasers` prices. Calculations are made in current and constant prices. Estimation in constant prices is obtained by dividing estimation in current prices by the consumers` price index. In Albanian national accounts, previous year price index is used in order to estimate consumption expenditures of households in constant prices. Thus, estimation of two consecutive years can be comparable and real growth rate can be calculated.
! What is Gross Capital Formation and what does it consist of?
Gross capital formation means gross of consumption of fixed capital. Net capital formation is arrived at by deducting consumption of fixed capital from gross capital formation.
Gross capital formation consists of:
i. Gross fixed capital formation,
ii. Changes in inventories,
iii. Acquisitions less disposals of valuables.
! What is Gross Fixed Capital Formation?
Gross fixed capital formation consists of resident producers' acquisitions, less disposals, of fixed assets during a given period plus certain additions to the value of non-produced assets realized by the productive activity of producer or institutional units.
Gross fixed capital formation consists of both positive and negative values, where positive are:
and negative values are:
! Which are the types of Gross Fixed Capital Formation?
The following types of gross fixed capital formation may be distinguished:
a) acquisitions, less disposals, of tangible fixed assets:
b) acquisitions, less disposals, of intangible fixed assets:
c) major improvements to tangible non-produced assets, in particular those pertaining to land,
d) costs associated with the transfers of ownership of non-produced assets, like land and patented assets.
! What are Changes in Inventories and which are its categories?
Changes in inventories are measured by the value of the entries into inventories less the value of withdrawals and the value of any recurrent losses of goods held in inventories.
Changes in inventories are split in four categories: