NSCB - First Quarter 2003 GNP - Technical Notes on the 1st Quarter 2003 Estimates: Series 2003-Q1-2

As part of the Technical Notes on the Philippine System of National Accounts (PSNA) regularly published in our website, the NSCB will be coming up with featured articles about issues/concerns on the PSNA that have been raised in various fora.

GDP as a Measure of Growth

“GDP is a measure of production. The level of production is important because it largely determines how much a country can afford to consume and it also affects the level of employment. The consumption of goods and services, both individually and collectively, is one of the most important factors influencing the welfare of a community, but it is only one of several factors. There are also others, such as epidemics, natural disasters or wars that can have major negative impacts on welfare, while others, such as scientific discoveries inventions or simply good weather, may have significant positive impacts. These factors obviously do not directly enter into the measurement of GDP, which refers only to the flow of goods and services produced within a given period. Thus, movements of GDP on their own cannot be expected to be good indicators of changes in total welfare unless all the other factors influencing welfare happen to remain constant, which history shows is never the case.” (Paragraph 1.69 “System of National Accounts 1993”, Eurostat, IMF, OECD, UN., WB). Hopefully, these points clarify some of the common causes of misunderstanding about GDP as an indicator of welfare.

Revisions on the GDP/GNP Estimates

In the compilation of the PSNA, revisions are done in accordance with the PSNA Revision Policy under the NSCB Resolution No. 8 Series of 1997, under which revisions on the quarterly accounts are limited to the immediately preceding quarter, except during the May round of estimates when revisions for the other quarters can be made. Hence, the quarterly estimates go through a series of revisions, the first of which is made in the immediately following quarter. Estimates become “final” only after three years. However, the “final” estimates can still be revised whenever NSCB undertakes an overall revision of the accounts, the most recent of which was completed in 1990 and the next one is scheduled to start in 2004.

Revisions in the national accounts estimates are normally due to the following: (1) availability of more complete data; (2) revised data from data sources; (3) availability of new data sets; and (4) inclusion/exclusion of coverage for new emerging industries/closures.

As of May 2003, the growth rates of GDP and GNP for 4 and 5 quarters, respectively, of the last 8 quarters have been revised downward from the preliminary or initial estimates (see Tables 1 and 2). For 2002 while the annual growth rates have been revised downward, the first and third quarter growth rates were revised upward between the January and the May round of estimates. Likewise for GNP, the first and fourth quarter growth rates were revised upward. For the last six years, the simple average of the revisions on the quarterly growth rates (difference between the initial and the latest estimates) is –0.03 for GDP and –0.18 for GNP.

Table

Revisions in the GNP estimates are affected by the revisions on the GDP estimates as well as on the estimates for the Net Factor Income from Abroad (NFIA). Usually, for the preliminary quarterly estimates of NFIA, data for the third month of the quarter are not available from the source agencies and NSCB makes its own estimate for the third month. Hence, the NFIA revisions are based both on the availability of new data and on revisions from the primary data sources, namely, the Philippine Overseas Employment Administration (POEA) for Overseas Filipino Workers (OFW) deployment data and the Bangko Sentral ng Pilipinas (BSP) Balance of Payment (BOP) for the property income and property expense. In the May 2003 estimation round, the POEA had revised estimates for the 2002 deployment data while the BSP had revisions in its BOP figures for 2000-2002.

Since 2001, revisions in the PSNA are presented as an integral part of the power point presentation of the NSCB Quarterly Economic Performance Report during the press conference on the national accounts, the schedule of which is announced on the NSCB website (www.nscb.gov.ph). Similarly, a table on the revisions is included in the publication of the national accounts.

Table

Preliminary Estimates

Preliminary national accounts estimates for the first, second and third quarters of each year are released 60 days from the reference quarter, while the fourth quarter has a time lag of only 30 days. In the compilation of official statistics, the NSCB tries to strike an appropriate balance between the timeliness/relevance of the statistics and their accuracy/reliability in order to provide users with the data they need at the time that they need it for decision making. In the case of the national accounts, with the short time lag, and given the existing capacity of the data sources including the data providers from the private sector, not all of the necessary data are available when preliminary estimates of GDP/GNP by sector are released to the public. In most cases, the data come in late and the NSCB staff has to work very late at night during estimation time to meet the release date as posted in our website. As part of our estimation procedures, the national accountants of the NSCB rigorously validate and cross check the data before they are used in the estimation. The estimates are cross-validated with other indicators and pass through a deliberation process among the NSCB management and technical staff before they are published. (Pls. refer to the other PSNA technical notes on the NSCB website for more info.)

National Accounts Link Series

The NSCB maintains a link series of the national accounts starting from 1946. With the current revisions, the published 3-year series (2000-2002) released last 17 June 2003 needs to be linked with the earlier series (1946-1999). We have programmed the updating of the national accounts link series starting September of this year.

For inquiries please contact Dir. Raymundo J. Talento at (632) 895-2425 or e-mail him at rj.talento@nscb.gov.ph


E-mail the webmaster	Terms of Use	Home • Top of Page
	1997-2008, National Statistical Coordination Board Makati City, Philippines