GDP according to the production approach
The compilation process of GDP by production approach can be summarized in two steps. In the first step gross value added at basic prices of all branches is estimated as the difference between output at basic prices and intermediate consumption at purchases' prices less financial services indirectly measured FISIM. In the second step taxes on products are added and subsidies on products are subtracted from the sum of gross value added of all branches to obtain GDP at market prices.
Real growth of GDP is among the most important indicators of the system of national accounts. Compilation of GDP at constant prices is important to determine the annual real growth rate of GDP. GDP at constant prices is measured as sum of gross value added of all branches at constant prices plus taxes and minus subsidies on products at constant prices.
The table below shows main categories of GDP by the production approach.
GDP according to the expenditure approach
GDP by the expenditure approach implies relationships betweeen four economic sectors, Households, Businesses, Government and Rest of the World and is measured as the sum of expenditure on goods and services of all those sectors. GDP by expenditure method is based on the below equation:
GDP = C + I + G + NX
After the estimation of GDP at current prices by expenditure approach, it is done the deflation with price indicies in order to obtained GDP at constant prices.
GDP calculations are based methodologically on the basic concepts of the European System of Accounts (ESA 2010) and the System of National Accounts (SNA 2008) of the United Nations Organization (UN). Both these methodologies are the latest updates to the ESA 1995 and SNA 1993
The European System of National and Regional Accounts (ESA 2010) is the newest internationally compatible EU accounting framework for a systematic and detailed description of an economy. The ESA 2010 was implemented by EU Member States in September 2014. More on this topic: http://ec.europa.eu/eurostat/web/products-manuals-and-guidelines/-/KS-02-13-269
The ESA 2010 differs in scope as well as in concepts from its predecessor ESA 95 reflecting developments in measuring modern economies, advances in methodological research and the needs of users. The structure of the ESA 2010 is consistent with the worldwide guidelines on national accounting set out in the System of National Accounts 2008 (2008 SNA). A description on the changes and effects of each changes is set out on the Manual of changes between ESA 95 and ESA 2010. This manual is very important and necessary to compile data in a reliable and comparable way within EU countries. More on this topic: http://ec.europa.eu/eurostat/en/web/products-manuals-and-guidelines/-/KS-GQ-14-002
In this context, Albania as a candidate country for EU accession has begun the implementation of ESA 2010 during year 2014. The National Accounts have implemented some of the new methodological changes as:
- Extension of the estimates for the financial sector, including all financial institutions for which data are available based on the new classification of the ESA 2010 and SNA 2008.
- Application of a new method for calculating financial intermediation services indirectly measured (FISIM).
- Evaluation of the production of the Bank of Albania score based on the distinction to be made between the production of market and non-market according to SNA 2008 / ESA 2010.
- Review of the definition for the production of insurance companies that offer non-life insurance.
- Methodological applications under the ESA in 2010 for the evaluation of expenditure indicators (treatment of final consumption of households according to COICOP 2 digit, treatment Gross fixed capital formation by type of assets, etc.).
Classifications are essential for the production, compilation and dissemination of statistics. The statistical classification are updated continuously to better reflect the economic, technological and structural changes in the economy and to enable comparison and data connection at European level and in general, in the world as part of an integrated system.
Classifications used in National Accounts are:
- Nomenclatures of economic activities Rev. 2 (NACE Rev. 2). The previous classification NACE Rev. 1.1 has been updated with new classification NACE Rev. 2 which introduces new concepts and higher levels of classification and new details that reflect different forms of production and emerging industries;
- Nomenclature of products (CP);
- Classification of Individual Consumption by use (COICOP);
- The classification of government expenditure by function (COIFOG).
For the estimation of GDP is used the information provided by various statistical and administrative sources. Data could be a result of surveys conducted from INSTAT or administrative data from different institutions as Ministries, General Directorate of Taxes and Customs, National Registration Center, Bank of Albania, Financial Supervisory Authority, National Agency of Natural Resources, etc. By comparing these sources with each other, it is obtained a clear picture of the ecomony which is comprehensive, consistent, coherent and fully intergrated.
The statistical sources include data gathered from various records and surveys on entities or households, among which we can mention:
- Bussines Register;
- Population and Housing Census;
- Structural Bussines Survey;
- Retail Trade Survey;
- Household Budget Survey;
- Labour Force Survey;
- Living Standart Measurement Survey;
- Price Statistics Survey;
Administrative sources include administrative data collected by other institutions for various purposes, among which may be mentioned:
- Annual financial statements;
- Value added tax (VAT);
- Monetary financial statistics;
- Balance of Payments;
- Government fiscal statistics;
- Foreign trade statistics;
- Data on electricity and energy products;
Stages of publication and revision policies
Estimates of annual GDP pass through three stages of calculations and publications.
- The first stage is the preliminary estimate of annual GDP, 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 Bussines Survey and administrative sources.
- The second phase includes 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 phase includes the final estimates of GDP for the year (t). In this third stage, when the data set of the year (t+1) is recieved, 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 in product level between the two methods of GDP.
The published data are revised based on revision policies of the national accounts. The annual estimates of the GDP and its components are subject of two types of revisions: routine and major revisions.
Annual routine revisions are as a result of updates of annual available data sources with the latest data of a given year 't". Estimation of GDP of year "t" pass through three stages of compilation until to final estimations. The first annual preliminary estimates on annual basis of the current year are available 11 months after the end of the reporting year (at the beginning of December of year t+1). Annual preliminary estimations are based on preliminary and data of annual surveys and other administrative sources. Preliminary estimates of annual GVA are revised after six months based on more comprehensive and updated informations. At the same time there are also revised the estimates of the previous year (t-1) in order to transform the estimates from semi-final to final.
Major revisions are linked with international methodology revisions (introduced by ESA 2010), changes in definitions, methods and classifications, as well as incorporation of a widening scope of various data sources
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.There are three types of output such as: Market output; output produced for own final use; non-market output.
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.
Taxes on products and imports
Taxes on products are paid taxation per unit of some goods and services like the Added Value Tax, excise and customs' tax on imports.
Subsidies on products andimports
Subsidies on products are non - reverse payment made by public administration units to the companies in the form of a certain amount of money per unit of goods or services. Subsidies in imports consist in subsidies of goods or services payable when the product surpasses the border of economic territory or if the services were made to resident institutional units.
Some financial intermediaries provide services for which they don`t explicitly charge their customers. Examples 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.
The sum, which the producer receives from the buyer per unit of product or service produced, excluding taxation on product and subsidiaries on it. (The basic price excludes transport expenses).
The basic price after adding taxes less subsidies on products.
Prices of reference period. It represents the price paid for goods and services in the production or consumption time.
Constant prices are adjusted for prices changes relative to a base year. They are a way of measuring the real change in output.
The indicator used to compare the real growth rate at which a Gross Domestic product (GDP) and its compontents changes/grows from one year to another.
Final consumption is one of the basic components of GDP by expenditure method. It consists in goods and services used by separate families or communities and is calculated as the sum of final consumption of household, final consumption of general government and final consumption of non - profit institutions serving the households.
Final consumption of households
Final consumption of households' contains all goods and services directly used to fulfil the individual needs of resident families.
Final consumption of General government and NPISHs
Is the value of non - commercial services ensured by General government and non - profit institutions to the profit of communities or groups of families. It is calculated as the difference between the general government production and NPISH s and their market production value.
Net export is the difference between export of goods and services (f.o.b) and import of goods and services (f.o.b).
Gross fixed capital formation
GFCF consist of resident producers acquistions less disposales, of fixed assets during a given period plas certain additions to the value of non-produced assets realised by productive activity of producer or institucional units Fixed assets are produced assets used in production for more than one year.
Part A - GNI compilation – Albania
PART B - Price and volume measures - Albania
Implementimi i ESA 2010 dhe NVE Rev.2 në Llogaritë Kombëtare Vjetore