Introduction to the SNA

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Introduction to the SNA
SEEAW Training course November 2006
UN STATISTICS DIVISION Economic Statistics
Branch National Accounts Section
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• Introduction
• SNA concepts
• Definition of assets
• Supply and use tables
• Conclusion

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• SNA concepts

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• System of National Accounts

• The national accounts are the source of
  information about the state and performance of
  the economy

• It conveys information about the performance of
  the economy in a similar way as that of the
  operating and financial accounts of an individual
  firm

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The broad objective of national accounts

• To integrate and reconcile data for economic
  analyses and monitoring.

It is central to all economic statistics
developments
By linking micro and macro data it provides an
integration across a wide range of statistics
It adds value to diverse data sets through
integration
The framework is not only for GDP estimates, but
is also useful for other groups of statistics
related to BOP, GFS, financial activities and
environmental accounts
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Structure of the SNA

• A set of national accounts provides
• A comprehensive and detailed recording
• of the flows and stocks of an economy
• in a systematic and integrated manner.

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Flows and stocks
Stocks are holdings of assets and liabilities at
a given time
Fixed capital, inventories, money and wealth
Flows reflect the creation, transformation,
exchange, transfer or loss of economic value
Flows provide a moving picture of the economy
Production aggregates, consumption expenditure,
investment and saving are all flow variables
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Flows and stocks
The way flows and stocks are recorded is governed
by a number of specific rules and conventions
aiming at quantifying the economic entries as
precise and consistent as possible.
These have to do with timing, valuation, and the
boundaries that distinguish economic flows and
stocks from non-economic variables.
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• Compilation

• Compilers of the NA have to content with all
  sorts of conceptual and data problems

• To cope with these problems a variety of
  conventions are used to classify, measure and
  exclude various items

• The NA are compiled in accordance with the System
  of National Accounts (SNA)

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• Gross domestic product (GDP)

• The GDP is the total value of goods and services
  produced within the boundaries of a country in a
  particular period

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• GDP methods

There are three ways to calculate the gross
domestic product of a country
Total value of production Output - intermediate
consumption
Total value of final sales Final consumption
Capital formation Exports - Imports
Total income earned Compensation Operating
surplus
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• Gross national income (GNI)

• In a particular period (say one year) residents
  (citizens of the country) earns income in other
  countries and foreigners earn income in your
  country

• GNI is calculated by
• adding the income earned by residents in other
  countries to the GDP and
• subtracting the income earned by foreigners in
  your country

• The GNI is the amount a country has available for
  consumption and saving.

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Standard Industrial Classification of all
Economic Activities (ISIC Rev3)
AB. Agriculture, forestry and fishing C. Minin
g and quarrying D. Manufacturing E. Electr
icity, gas and water F. Construction GH. Wh
olesale and retail trade, hotels and
restaurants I. Transport, storage and
communication JK. Financial intermediation,
insurance, real estate and business
services LM N. Public Admin, education, health,
social work O. Other community, social and
personal services
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Standard Industrial Classification of all
Economic Activities (ISIC Rev4)
A. Agriculture, forestry and fishing B,C,DE.
Mining and quarrying, manufacturing, electricity,
gas and water of which C. Manufacturing F.
Construction G,HI. Wholesale and retail
trade, transport accomm. and food services
J. Information and communication
JK. Financial intermediation,
insurance, L. Real estate MN Business
services O,P,Q. Public Admin, education, health,
social work R,S,TU. Other services
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Institutional sectors

• Financial corporate sector

• Non-financial corporate sector

• General government sector

• Household sector

• NPISHs

• ROW

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Transaction flows in the economy
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Transactions
Production
Value added/GDP
Income distribution Use of income
Saving
Stocks
Stocks
Other flows
Capital transfers
Closing balance sheet
Opening balance sheet
Revaluation
Non-financial asset
Non-financial asset
Capital formation
Net lending
Other volume changes
Financial Assets and liabilities
Financial Assets and liabilities
Financial transactions
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Definition of assets
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Definition of an asset

• The assets recorded in the System are economic
  assets

• ownership rights can be enforced

• economic benefits may be derived by
• holding them, or using them, over time

• It is a store of value that depends upon the
  amounts of the economic benefits that can be
  derived from it by its owners.

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Definition of an asset (cont)
This value (discounted for inflation) does not
usually remain constant but often diminish with
the passage of time.
Different kinds of benefits may be derived such
as

• (a) Using assets such as machinery in production

(b) Property incomes for example, interest,
dividends, rents, etc., received by the owners of
financial assets and non-produced assets
(c) Some assets may be held purely as stores of
values (precious metals or stones, etc.) without
any other benefits being derived from them.
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Asset boundary

• All entities which meet the definition of an
  asset appear on the balance sheet of the economy.

• All assets can be represented by a monetary value

• Value represents the markets view of the total
  of the benefits embodied in the asset.

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Types of assets
Produced

• Enter via production or imports

• Leave via being exhausted, sold to residents for
  use other than as asset, sold to non-residents

Non-produced

• It exists, like land and sub-soil assets or
• Appears over time and is valued/recognised when
  there is an equivalent market price

• May leave via depletion or impairment

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Assets in the 1993 SNA
Financial assets
Non-financial assets
Produced
Non-produced
Fixed
Inventories
Valuables
Intangible
Tangible
Tangible
Intangible
- Land - Subsoil assets - Non-cult biological
resources - Water resources
- Patented entities - Leases and contracts -
Purchased goodwill
- Mineral exploration - Computer software -
Entertainment, literary or artistic
originals - Other
- Buildings - Structures - Machinery Equipment
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Assets in the SNA update
Financial assets
Non-financial assets
Non-produced
Produced
Fixed
Inventories
Valuables
Natural resources
Contracts, leases and licenses
Goodwill and marketing assets

• IP products
• RD
• - Mineral exploration and evaluation
• - Computer software and databases
• - Entertainment, literary or artistic originals
  
• - Other IP products

- Natural land - Mineral dep energy reserves -
Non-cult biological resources -
Water resources - Other natural resources
Buildings Structures Machinery Equipment
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• Supply and Use tables

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Supply and use

• Equations
• Supply Use by product

Total supply Output imports
Total use Intermediate consumption Final
consumption Capital formation Exports
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Supply table
Industry Industry Industry Total Imports fob Cif/ fob adj. Total product supply at basic prices Trade and transport margin Import duties Taxes less subsidies on products Total supply at purchasers prices
1 2 3
Product 1 156 24 180 15 195 33 2 11 241
Product 2 9 80 89 8 97 27 1 6 131
Trade and transport and insurance 62 62 1 -2 61 -60 0 1
Cif/fob adjustment -2 2 0
Total output at basic prices 165 104 62 330 22 0 352 3 17 373
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Use table
Intermediate consumption of industries Intermediate consumption of industries Intermediate consumption of industries Total economy Exports fob Household consumption expenditure Government final expenditure Gross capital formation Total use of products at purchasers prices
1 2 3
Product 1 25 35 13 73 28 100 40 241
Product 2 32 20 10 62 9 50 10 131
Trade and transport and insurance 0 1 1
Total use 57 55 23 135 37 151 10 40 373
Gross value added 108 49 39 196
Taxes less subsidies on production and imports 20
Output at basic prices 165 104 62 331
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Role of supply and use table

• Compilation tool
• Verification
• Reconciliation
• Balancing

• for
• Benchmark estimates
• Annual national accounts in constant prices
  extrapolated using volume indexes or deflating
  using price indexes
• Quarterly national accounts using price and
  volume indexes from short-term indicators

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Source data

• Annual establishment/enterprise surveys and
  profit and loss/balance sheets of enterprises

• Government revenue and expenditure budgets

• Household budget surveys

• Custom data on exports and imports of goods

• Balance of payments on exports and imports of
  services

• Administrative data
• Business registers, employment, production,
  volume and price information, etc.

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• Data can be derived from a variety of different
  sources, such as administrative and business
  records, as well as specially conducted censuses
  and surveys. In practise, however, macroeconomic
  accounts can seldom be built up by simply
  aggregating the relevant micro-data.
• (SNA 9312)

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• Thank You