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Technical notes on the PSNA are published in the NSCB website for a better appreciation of the country’s national accounts.  Reference should also be made to the earlier technical notes for the current national accounting practices adopted in the Philippines.

Notes on the Quarterly GDP/GNP Revisions, Q1 1992 to Q2 2007

This special edition of Technical Notes on the PSNA was prepared in response to the suggestion of Professor Solita C. Monsod of the University of the Philippines and former Secretary of Socioeconomic Planning and the first Chair of the NSCB.  We are especially grateful to Prof. Monsod for her valuable comments and suggestions that have greatly contributed towards making the products and services of the NSCB and of the Philippine Statistical System (PSS) more responsive to the needs of our stakeholders.

1.   Revision policy on the Philippine System of National Accounts (PSNA)

Updating or revision of the accounts as additional data become available is a standard international practice.  Further, communicating revision policies is recognized as an important aspect of good governance in statistics, which in turn, is part of public sector transparency and accountability.  Revisions take place for a number of reasons - to incorporate more complete or better source data, to update base periods, or to make other improvements and sometimes to correct errors.  Cognizant of the necessity of revising official statistics, national statistical offices are now encouraged by international institutions like the International Monetary Fund (IMF) to articulate their policies on data revisions.  For a more detailed and comprehensive explanation on the rationale and purpose of revising official statistics, the reader is referred to the Statistically Speaking article of Dr. Romulo A. Virola, NSCB Secretary General, entitled Revision of Official Statistics – Is it Cheating?.

In the Philippines, preliminary quarterly estimates that are based on preliminary results of surveys and administrative records are produced by the NSCB in order to present timely information on the performance of the economy.  However, as revised and more comprehensive and up-to-date survey and administrative data become available, the estimates are revised to incorporate these more complete data sets.

As early as 1997, the NSCB has recognized the necessity of revising official statistics and thus formulated its revision policy on the national accounts as approved by the NSCB Executive Board through NSCB Resolution No. 8, Series of 1997.  Pursuant to the Resolution, updating of the Quarterly Accounts for each quarterly estimation is limited to the immediately preceding quarter except during May round estimation where updating of the past quarters of the immediately preceding past three years is allowed.

2.  Summary of revisions on the quarterly Philippine GDP and GNP growths

In the spirit of transparency, revisions made on the GDP and GNP growths over the last 15 years from Q1 1992 to Q2 2007 were summarized and presented in Appendix Table A.  For each quarter, the following GDP and GNP growth estimates were presented and compared:

1. preliminary estimate – estimate released two months after the reference quarter for Q1, Q2 and Q3 while for Q4 this would refer to the estimate released in January the following year or one month after the reference quarter
2. first revision – revised estimate released the following quarter after the release of the preliminary estimate, or 5 months after the reference quarter; and
3. final estimate – estimate released in May of the third year, e.g., final estimates for Q1 to Q4 2004 were released in May 2007.

After the first revision, estimates undergo three more series of revisions, i.e., in May the following year, in May of the second year, and when they are finalized in May of the third year.  However, estimates after the first revision and prior to the final revision were no longer included in the summary presented in Appendix Table A.

For each quarter, percentage point revisions were computed for the following: (a) between the preliminary estimate and the first revision; and (b) between the preliminary estimate and the final/revised (as of November 2007) estimate.  Percentage point revision is derived as the difference between the preliminary estimate and the revised/final estimate.  Absolute percentage point revision, on the other hand, is simply the difference without regard to sign.

Due to breaks in the national accounts series, particularly in 2000 and 2004, statistics on GDP/GNP growth revisions are likewise presented in Table 1 for the following sub-periods: (a) Q1 1992 to Q4 1999; (b) Q1 2001 – Q4 2003; and (c) Q1 2005 to Q2 2007.

2.1 Analysis of summary statistics across all quarters

Table 1 presents the summary statistics on GDP and GNP growth revisions as derived from Appendix Table A.  Mean revision was computed by averaging the quarterly percentage points revision across the 15-year period while mean absolute revision was computed as the average of the quarterly absolute percentage point revision, or the average revision without regard to sign.

Table 1. Summary statistics on GDP and GNP growth revisions from Q1 1992 to Q2 2007

Statistics	Between preliminary estimate and …
	FIRST revision	FINAL revision/ REVISED estimate as of November 2007a
	(1)	(2)
For GDP growth rates
Mean revision	0.08	0.21
Mean absolute revision	0.23	0.66
No. of revisions
Upward	29	38
Downward	18	18
For GNP growth rates
Mean revision	0.06	0.14
Mean absolute revision	0.33	0.93
No. of revisions
Upward	29	28
Downward	22	28

a / FINAL revision in the case of Q1 1992 to Q4 2004. For Q1 2005 to Q3 2006, only REVISED estimates as of November 2007 since final estimates for these periods are yet to be generated. Revised estimates from Q4 2006 to Q2 2007 are reflected under column 1 (FIRST revision) since these estimates have so far undergone only first revisions.

Table 1 shows the following trends:

For GDP revisions

• GDP growth rates had a mean revision of 0.08 percentage point and a mean absolute revision of 0.23 percentage point between the preliminary and the first revision.
• Corresponding revisions for GDP growth rates between the preliminary and final estimates showed larger quantities at 0.21 and 0.66 for mean and mean absolute revisions, respectively.
• Upward revisions are more frequent and this is more noticeable for revisions from preliminary to final estimate, that is, 38 upward vis-a-vis 18 downward as against the 29 upward vis-a-vis 18 downward revisions from preliminary to first revision.  These are plotted in Figures 1a and 1b for percentage point revisions between preliminary and first revision and between preliminary and final/revised estimate as of November 2007, respectively.

For GNP revisions

• Mean revisions for GNP growth both from preliminary to first revision and from preliminary to final revision, were slightly smaller than those for the GDP at 0.06 and 0.14 percentage points, respectively.
• Mean absolute revisions for GNP growth were larger than for GDP growth at 0.33 percentage point between the preliminary and the first revision and 0.93 percentage point between the preliminary and the final revision.
• GNP growth revision from preliminary to final revision showed equal number of upward and downward revisions.  Charts on percentage point revisions between preliminary and first revision and between preliminary and final/revised estimate as of November 2007 are found in Figures 2a and 2b, respectively.

2.2 Analysis of summary statistics by quarter

Table 2 presents the summary statistics by quarter on GDP and GNP growth revisions.

• Upward revisions are more frequent than downward for first quarter preliminary estimates of GDP growth, that is, 10 versus 4, respectively (columns 7 and 8).  For GNP growth estimates, on the other hand, frequency of upward revisions was only higher by one, 8 versus 7.
• Second quarter preliminary estimates were clearly dominated by upward revisions for both GDP and GNP, that is 11 versus 3 and 10 versus 5, respectively. 
• For both third and fourth quarter preliminary estimates, GDP growth was more often revised upward than downward while the reverse is true for GNP growth.

Table 2: Summary statistics by QUARTER on GDP and GNP growth revisions
from Q1 1992 to Q2 2007

Indicator	Quarter	Between preliminary estimate and …
		FIRST revision				FINAL revision/ REVISED estimate as of November 2007a
		Mean revision	Mean absolute revision	No. of revisions		Mean revision	Mean absolute revision	No. of revisions
				Upward	Down-ward			Upward	Down-ward
		(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
For GDP growth rate	Q1	0.02	0.14	5	6	0.37	0.65	10	4
	Q2	0.14	0.21	8	3	0.34	0.62	11	3
	Q3	0.12	0.27	7	4	0.20	0.67	9	5
	Q4	0.02	0.29	9	5	(0.08)	0.69	8	6
For GNP growth rate	Q1	(0.01)	0.39	7	7	0.19	0.91	8	7
	Q2	0.26	0.31	10	2	0.43	1.21	10	5
	Q3	(0.10)	0.31	4	8	(0.03)	0.74	5	9
	Q4	0.07	0.28	8	5	(0.04)	0.84	5	7

a / FINAL revision in the case of Q1 1992 to Q4 2004. For Q1 2005 to Q3 2006, only REVISED estimates as of November 2007 since final estimates for these periods are yet to be generated. Revised estimates for Q4 2006, Q1 2007 and Q2 2007 are reflected under columns 1 to 4 (FIRST revision) since these estimates have so far undergone only their first revisions.

3. Revisions in Philippine GDP vis-à-vis GDP of US and India

Table 3 presents the mean revision of GDP growth of the Philippines as compared with that of a developed country (US) and a developing country (India).

1. Mean absolute revision between the preliminary estimate and the first revision for the Philippines is lower than the US, that is:
   • 0.23 as against 0.51, for the period 1992 to 2007 for the Philippines and 1983 to 2002 for the US; and
   • 0.32 as against 0.47 for the shorter period Q1 2004 to Q1 2007.
2. For percentage point revision between the preliminary and the final (or most recent) revision, the Philippines’ is again lower than those of both US and India for all the periods presented.

Table 3. Mean absolute revision of Philippine GDP growth
vis-à-vis US and India’s GDP/GDP growth

Reference estimates	Mean Absolute (Percentage Point) Revision in GDP/GDP growth
	US		Philippinesc			Indiad
	1983 - 2002a	Q1 2004- Q1 2007b	Q1 1992- Q2 2007	Q1 1998- Q4 2004	Q1 2004- Q1 2007	Q1 1998- Q4 2004
(1)	(2)	(3)	(4)	(5)	(6)	(7)
Between the initial estimate and the first revision	0.51	0.47	0.23	0.24	0.32	na
Between the initial estimate and the final revision/revised estimate as of Nov 2007	1.29	na	0.66	0.86	0.45	1.10

a/ Percentage point revisions cited are in terms of changes in levels (Source: Fixler, Dennis. Revisions to GDP Estimates in the U.S.
(http://www.bea.doc.gov/bea/papers/fixler_gdp_revise.pdf))
b/ Percentage point revisions cited are in terms of changes in growth rates based on seasonally adjusted annual rates (Source: Seskin, Eugene P. and Smith, Shelly. Annual Revision of the National Income and Product Accounts, Annual Estimates for 2004–20
c/ Percentage point revisions cited are in terms of changes in growth rates.
d/ Source: Kolli, Ramesh (Central Statistical Organization), Revisions in India's GDP Estimates, paper presented during the OECD/ONS Workshop on Assessing and Improving Statistical Quality - Revisions Analysis for the National Accounts, Paris, 7-8 October 2004.

 

4.   Summary of findings

The findings of this exercise can be summarized as follows:

• Revisions in GDP growths from 1992 to 2007 were dominated by upward revisions.
• While equal frequencies of upward and downward revisions (between preliminary and final estimates) was noted for GNP across all quarters from 1992 to 2007, examination by quarter revealed that second quarter estimates were more often revised upward while the reverse is true for third and fourth quarter estimates.
• In terms of magnitude of revision, mean absolute revisions of the country’s GDP growth for selected periods were relatively small compared with those of US and India.

 

For inquiries please contact:
Dir. Raymundo J. Talento
Tel.No.: (632) 895-2425
Email: rj.talento@nscb.gov.ph

 

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