International Workshop on Measuring GDP by Final Demand Approach

1
International Workshop on Measuring GDP by Final
Demand Approach
Country Presentation Nepal
Uttam Narayan Malla, Director General Suman
Aryal, Director Central Bureau of
Statistics Kathmandu www.cbs.gov.np
2
Historical Perspective

• First attempt in 1961/62 by then Ministry of
  Economic Planning
• Gap of two years
• Responsibility shifted to CBS
• Continuation after 1964/65

3
NA compilation practices

• GDP predominantly based on Value added approach
• Separate estimates of expenditure components
  except change in stocks
• Change in stock residually estimated
• No explicit statistical discrepancy
• Attempt to produce GDP by income approach

4
Rebasing and linking practices

• Analytical and Mechanical re-referencing
• Base year
• 1964/65 Analytical and First NA series
• 1974/75 Analytical
• 1984/85 Analytical
• 1994/95 Mechanical linking
• 2000/01 - Analytical

5
Demand Components

• Final Consumption Expenditure
• Government
• Households
• Nonprofit institution serving households
• Capital Formation
• Gross fixed capital formation
• Change in stocks
• Net exports
• Exports
• Imports

6
Measuring Household Consumption

• HIES Resolution
• Households Consumption Expenditure
• Value of consumer goods and services acquired,
  used or paid for by a household through direct
  monetary purchases, own account production,
  barter or as income in kind for the satisfaction
  of the needs and wants of its members
• Actual final consumption of Households
• Sum of its household consumption expenditure and
  the value of consumer goods and services acquired
  or used by the household through transfers from
  government, non-profit institutions or other
  households

7
Household Consumption

• Major Data Source
• Household Survey
• Retail Survey
• Balance of payments
• Value added tax
• Income and consumption link
• functional relationship between disposable income
  and consumption
• Commodity flow

8
Compilation practice in Nepal

• Independent estimates for
• Households final consumption expenditure
• Government final consumption expenditure
• NPISH final consumption expenditure
• Gross fixed capital formation
• Exports
• Imports
• Residual
• Change in stocks
• Statistical Discrepancy
• No explicit discrepancy
• Change in stocks contains discrepancy also

9
Compilation practice in Nepal

• Household consumption largest single component
• Accounting for around 80 of GDP
• Benchmark data
• Nepal Living Standards Survey (NLSS)
• Balance of Payment
• Extrapolation
• Population growth rate
• CPI for food, non food and service separately
• Price system applied
• Acquisition price
• Includes non-deductable VAT and other taxes on
  products
• Includes all types of margins
• Income Consumption Link
• Some exercise had also been carried out.

10
Coverage and sources
  Coverage Source
1 Goods and services bought for final consumption by households NLSS
2 Goods produced for own final consumption by households NLSS
3 Services of owner-occupied dwellings NLSS
4 Goods and services acquired by households in barter transactions for final consumption NLSS
5 Goods and services received by households as payment in kind from producers NLSS
6 Expenditures incurred in do- it-yourself decoration, maintenance and routine repairs of own dwellings and personal goods NLSS
7 Payment to government units to obtain various kinds of licenses, permits, certificates, passports NLSS
8 Explicit and imputed service charges on household uses of financial intermediation services provided by banks, insurance companies, pension funds NLSS
9 Purchases made outside the residence territory BOP
11
Nepal Living Standards Survey
Consumption related questions at a glance
12
Classification adopted

• COIPCOP
• Not adopted yet
• Disaggregation is based on
• CPI components
• Correspondence
• NLSS consumption headings and CPI components

13
Major CPI Components
FOOD BEVERAGES
Grains and Cereal Products
Pulses
Vegetables and Fruits
Spices
Meat, Fish and Eggs
Milk and Milk Products
Oil and Ghee
Sugar and Related Products
Beverages
Restaurant Meals
NON-FOOD SERVICES
Cloth, Clothing Sewing Services
Footwear
Housing Goods and Services
Transport and Communication
Medical and Personal Care
Education, Reading and Recreation
Tobacco and Related Products
14
Actual Final Consumption

• Sum of household consumption expenditure,
  individual consumption expenditure of Government
  and consumption expenditure of NPISH

15
Consumption in Figure
in millions Rs.
16
Typical Issues

• Credit issues
• may involve three distinct components
• price of the goods itself- It is Consumption
• expenses of the financial company
  making loan It is Consumption
• interest payments Not consumption
• No such distinctions are made
• Unincorporated Household Sector
• Spending is intermediate consumption
• No such analysis has been done

17
General Issues/Limitations

• Systematic Errors
• Sampling error of the survey itself
• Coverage Errors/Uncertinities
• goods and services purchased infrequently
• Economy of Scale
• Supply and Use tables

18
What's new in Supply and Use Table

• Independent estimates for change in stocks for
  2004/05
• New level for household consumption
• Estimates for around 52 different good and
  services
• Commodity flow approach
• around 5 higher than published one.
• Adjustment for FISIM allocation

19
Scheduled program

• Follow up consumption survey
• Exploring the VAT and government account detail
• Separate treatment for
• Infrequent Goods and services bought for final
  consumption by households
• Payment to government units to obtain various
  kinds of licenses, permits, certificates,
  passports
• Explicit and imputed service charges on household
  uses of financial intermediation services
  provided by banks, insurance companies, pension
  funds
• Change in Stocks

20
Thanks