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| I. Analytical Framework, Concepts, Definitions, and Classifications |
2.1.1 Concepts and definitions Statistical concept Quarterly National Accounts form an integral part of the European System of Accounts (ESA 1995). They constitute a coherent set of transactions, accounts and balancing items, defined in both the non-financial and financial domains, recorded on a quarterly basis. They adopt the same principles, definitions and structure as the annual accounts (see the main aggregates domain). The ESA 1995 regulation (Regulation 2223/96 of the European Council) and Eurostat's "Handbook on quarterly national accounts" may be referred to for more specific explanations on methodology. Definition of indicators Gross domestic product (GDP) at market prices is the final result of the production activity of resident producer units (ESA 1995, 8.89.). It can be defined in three ways: a. Output approach GDP is the sum of gross value added of the various institutional sectors or the various industries plus taxes and less subsidies on products (which are not allocated to sectors and industries). It is also the balancing item in the total economy production account. b. Expenditure approach GDP is the sum of final uses of goods and services by resident institutional units (final consumption expenditure and gross capital formation), plus exports and minus imports of goods and services. c. Income approach GDP is the sum of uses in the total economy generation of income account: compensation of employees, taxes on production and imports less subsidies, gross operating surplus and mixed income of the total economy. As stated before, the Quarterly National Accounts adopt the same principles, definitions and structure as the annual accounts. This means that the figures presented in this domain are, apart from the length of the reference period, i.e. the frequency, equivalent in definition to the annual figures given in the main aggregates domain. Thus, for further methodological information relating to single variables, please refer to the summary methodology document given there. In particular, refer to this document for details on the allocation of FISIM (financial intermediation services indirectly measured). Not all Member States have allocated FISIM in their quarterly accounts yet, and some have done it only for a number of recent quarters. Please note also that the quarterly accounts contain both data at current and at constant prices (the latter not for all aggregates). Where both are available, implicit price indices (deflators) are also calculated.2.3.1 Classification/sectorization Classification system and conformity with official standards Figures are given for most of the variables of the following tables of the transmission programme in annex B of the ESA 1995: · Table 0101 (Gross value added at basic prices and gross domestic product at market prices, A6 breakdown), Please note that transmission of tables 0113 to 0121 is voluntary, so coverage can be expected to be less complete compared to tables 0101 to 0112. See ESA95 Annex IV or refer to RAMON classification database for more details: link Economic activity An industry (ESA95, 2.108) consists of a group of local kind-of-activity units (i.e., a type of establishment) engaged in the same, or similar, economic activity. Production units in the same industry have the same main activity but may have different secondary and/or ancillary activities. ESA95 uses aggregation levels of the NACE Rev.1.1 classification to define industry breakdowns. The NACE Rev.1.1 is a classification of economic activities widely used in statistics and in other domains. ESA95 defines several working aggregation levels of NACE Rev.1.1, three of them are used for publication here: these are the levels having six (A6), seventeen (A17) and thirty-one (A31) categories. A6 and A17 are used for quarterly and annual data, whereas A31 is only used for annual data. A6/17 industries
Please note that the sum of Gross Value Added (GVA) over these branches (Total GVA) will equal GDP only after deducting FISIM (provided that FISIM is not allocated yet for the country under consideration) and adding taxes less subsidies on products (these two aggregates are available in the "main aggregates" collection.). Investment products In analogy to aggregation of activities, products can be grouped according to the CPA product classification. ESA95 defines the aggregation Pi6 of six types of investment goods, as follows: 1. Products of agriculture, forestry, fisheries and aquaculture. Pi6 is used to break down gross fixed capital formation. Consumption purpose Household consumption expenditure can be classified by consumption purpose according to the COICOP classification (Classification Of Individual COnsumption by Purpose, see also Commission Regulation 113/2002 of 23 January 2002). COICOP categories at two-digit level are as follows:
For the complete classification, please refer to Eurostat's RAMON classification database or to the United Nations classification registry. |
| II. Scope of the data |
2.2.1 Scope Scope of the data Geographical coverage Eurostat computes aggregates for the EU and the euro area as a whole. Moreover, when it is possible, it publishes data on Quarterly National Accounts aggregates for Member States separately, EFTA countries and Candidate Countries, the The length of the series available varies widely from one country to another, partly due to derogations provided for in the transmission and back-projection programme. The default minimum period covered is currently from 1995 onwards, with some exceptions in the case of the New Member States. For many countries, however, longer series are available. The allocation of FISIM to user sectors has not been applied yet by all Member States to the whole length of time series previously covered. This can result in breaks in the time series shown. Since National figures are collected from National Statistical Institutes' Accounts Departments, for further information you may also refer to National Statistical Institutes and National Central Banks. Statistical units and Statistical population National accounts are dealing with the economy (or large sub-sectors) as a whole. It combines data from a host of base statistics, and thus has no common sampling reference frame. The elementary building block of ESA95 statistics is the institutional unit (ESA95, 2.12.), “an elementary economic decision-making centre characterised by uniformity of behaviour and decision-making autonomy in the exercise of its principal function”. This can be, amongst others, a household, a corporation or a government agency. Institutional units producing goods and services are often engaged in a combination of activities at the same time. For national accounts purposes, they are therefore split into local kind-of-activity units (ESA 1995, 2.102.), characterised by involvement in a single activity. These are then grouped into industries, so that a big industrial enterprise may contribute to activities in a number of different branches. For further detail, please refer to ESA95. |
| III. Accounting Conventions |
2.4.2 Recording basis Reference period The periods referred to are quarters, with temporal coverage varying between geographical units. Recording of transactions For any accounting conventions with respect to the recording of transactions, please refer to the ESA95 and the Handbook of Quarterly National Accounts.2.4.3 Grossing/netting procedures It should be noted that Quarterly National Accounts figures, in contrast to foreign trade statistics, are not consolidated for intra-Euro Area trade. |
| IV. Nature of the Basic Data Sources |
3.1.1 Source data collection programs Data sources used Eurostat publishes national accounts data for European Union (EU25), euro area and country data (for EU Member States, EFTA countries, Candidate Countries, the Countries use many sources to compile their national accounts, among them administrative data from government, censuses, business surveys and households surveys. Sources vary from country to country and may cover a large set of economic, social, financial and environmental items, which need not always be strictly related to national accounts. In any case, there is no single one survey source for national accounts. In particular, different sources are used for calculating the different approaches of GDP mentioned above under ‘definition of indicators’. If more than one of these approaches is used, their results are usually balanced, i.e. forced to be coherent, so that a single value for GDP is obtained. For further information about sources and collection methods in National Statistical Institutes (NSIs), please refer to National Statistical Institutes and National Central Banks (see Eurostat’s web site, and after having chosen the language to be used, select menu: All Services - Links and Contacts). |
| V. Compilation Practices |
3.3.2 Other statistical procedures Compilation of European aggregates Quarterly data for the euro area and the European Union are derived from all countries for which the respective quarterly data are available. As not all Member States collect quarterly data in time for the different releases scheduled by Eurostat, and some countries do not yet compile quarterly data at all, the following procedure is used to produce quarterly estimates of the European aggregates: · All the available quarterly data from Member States are summed up in order to calculate indicators to be used for the estimation of euro area and European Union aggregates. Some data from the largest Member States (
For Eurostat's flash estimate of real quarterly GDP growth, the procedure is basically the same, the main difference with respect to the regular estimations is the nature of the basic statistics used. For the flash estimate, these are primarily the flash estimates of GDP provided by some "Flash estimation of the quarterly Gross Domestic Product for the euro area and the European Union - Eurostat methodology" Accounting units All national accounts variables are shown in monetary units. Exceptions are population (measured in persons) and employment (measured in persons, jobs or hours worked). Variables expressed in monetary terms are given in national currency and in ECU in two separate series. For countries that have joined the euro area, the national currency is the euro. Countries have converted their former national currency series to euro by using the irrevocably fixed conversion rate to all years, that is even for years before they actually joined the euro area. This procedure ensures that national time series preserve their growth rates without exhibiting a break due to change of currency unit nor exchange rate fluctuations of their former currency. The national currency series expressed in Euro are referred to as fixed Euro series. On the other hand, the euro/ECU series for all countries (including countries in the euro area) are calculated with market exchange rates, which are variable for years before adoption of the euro (1999 in most cases). These series are suited for international comparisons and in particular for geographical aggregations, as Eurostat does them in order to construct EU25 aggregates. In summary: · National currency series (including fixed euro series for euro area Member States) are suitable for studying the development of a variable in a single country over time. · ECU/euro series are suitable for internal comparison and aggregation. When comparing them over time, account must be taken of exchange rate effects. · Both series coincide for years after accession to the euro area. They differ for earlier years due to exchange rate movements.
Base period The base year for computation of constant prices is traditionally a single, fixed year, which is moved ahead about each five years. The whole time series available is then expressed in prices of the new base year. This practice has the unpleasant feature that the further one moves away from the base year, the more irrelevant becomes the price structure of the base year for the economic reality. In particular for economic activities in dynamic fields with rapidly moving prices (such as information and communication technologies) expressing growth in prices of a distant year leads to serious distortions. This is why Commission Decision 98/715/EC demands that the base year shall be the previous year. This guarantees that volumes are measured using the most recent price structure. However, this also means that the base is moved ahead depending on the observation period, and no two years have the same price base, so that volume growth rates cannot be calculated directly from series at previous year's prices. Multiplying successive growth rates starting from an arbitrary reference year’s level will give a true volume time series. Due to its construction, this is called a chain-linked series. Chain-linking of quarterly data is technically more complicated than with annual data. Chain-linking quarterly data on a quarterly basis (i.e. linking quarter-on quarter growth rates, using data at prices of the previous quarter) is a straightforward extension of the annual argument, but faces the risk of the so-called drift problem (see SNA93, chapter XVI for details). EU Member States and most other countries have decided instead to chain-link quarterly data annually, i.e. to chain-link quarterly estimates at the average prices of the previous year (rather than at prices of the previous quarter). There are three well-known techniques for linking the quarterly elements of the chain: one-quarter overlap, annual overlap and over-the-year. The choice of linking technique, while known to produce different results, has proven to usually have only minor impact when applied to actual national accounts data. Eurostat is applying the annual overlap technique for the EU accounts. While the moving price base brings more accurate description of economic developments, it involves the loss of additivity: chain-linked components of GDP will usually not sum to chain-linked GDP, and chain-linked Member States' GDP will not sum to chain-linked EU GDP. For this reason also, custom aggregations cannot be derived by simple summation of the chain-linked components, but must be derived from summing the component series at current and at constant prices, calculating growth rates and chain-linking the results. In addition, chain-linking cannot be performed directly on variables that can take both negative and positive values. Thus, no chain-linked series are provided for changes in inventories (P52), acquisition less disposal of valuables (P53) and the external balance (B11, B111 for goods only, B112 for services only). The concept of chain-linking was introduced into the EU accounts end-November 2005, with 2000 as reference year. This replaces the previously used fixed base year 1995. While the majority of European countries have already done the change-over to previous year's prices and chain-linking, some have not yet done so. The current situation (status March 2006) is as follows: · Applying chain-linking in (annual and) quarterly accounts: CZ, DK, DE, ES, IE, LT, LU, MT, NL, AT, PL, PT, SI, FI, SE, UK & CH, NO, IS & EU · Not applying chain-linking in quarterly accounts yet: BE, EE, EL, FR, CY, LV, HU, SK Adjustments If Member States' accounts show discrepancies (explicit or implicit) between GDP and the sum of components, European annual accounts derived from summing these up would show a discrepancy equal to the sum of Member States' discrepancies. To avoid this, European annual accounts use some variables to adjust for any possible lack of additivity between the total and the sum of its components, i.e. these variables are effectively used as balancing items. This is only possible at current and at previous year's prices, because of the lack of additivity induced by the chain-linking technique. The balancing variables are P.52+P.53 (change in inventories plus net acquisition of valuables) for the expenditure approach and B.2G+B.3G (gross operating surplus and mixed income) for the income approach. For the output approach, all elements are subject to a proportional adjustment. Similarly, when calculating European aggregates, Eurostat corrects country data for lack of additivity if a variable does not equal the sum of its (industry, product or COICOP) breakdowns. As regards national income, accounting consistency is actually established by deriving some variables directly from the accounting equations, rather than estimating them directly. This is the case for K.1 (consumption of fixed capital), D.5+D.6+D.7 (other current transfers with row), B.8N (Net saving) and D.9 (capital transfers with row). A major exception to general accounting consistency is the equation: GDP + net primary income received from row = GNI In this equation, all three variables are computed independently, since the implicit derivation of net primary income was found to be subject to arbitrary movements which are small in size relative to the two aggregates, but significant for the balance of primary income. Consistency between QNA and ANA in temporal aggregation (i.e. quarters will sum to the corresponding annual value) is established by the estimation procedure. Non-seasonally adjusted QNA are consistent with the published “standard” annual accounts. Seasonally adjusted QNA on the other hand are consistent with annual accounts to which a partial working-day adjustment has been applied. Differences in the annual growth derived from quarterly seasonally adjusted data and annual growth as published in the annual accounts is thus due to an annual working-day effect. NSIs may provide explicit balancing adjustments for their national accounts. These are recorded as “discrepancy items” in the appropriate tables. Seasonal adjustments are carried out directly by Members States. Most countries compile quarterly accounts both in raw and seasonally adjusted form, other countries compile just a partial seasonally adjusted set, and a few others, in particular among the new Member States, still compile unadjusted figures only. Two main groups of methods can be distinguished: moving average based methods and model based methods (Handbook of Quarterly National Accounts, 8.30). The most widely used moving average based method for seasonal adjustment is Census-X11 (and its upgrades). TRAMO/SEATS is a well-known method that belongs to the latter group of procedures. At present, National Statistical Institutes in the European Union Member States use differing methods of seasonal adjustment, all of them however belonging either to the X11 or the TRAMO/SEATS families of methods. Seasonal adjustment of the European aggregates is done indirectly, i.e. seasonally adjusted series are calculated from seasonally adjusted Member States' data, rather than directly applying seasonal adjustment to the unadjusted European series (which in turn is derived from unadjusted Member States' data). The European seasonally adjusted series thus include a mix of seasonal adjustment procedures. Working-day adjustment is applied as an optional pre-treatment in the seasonal adjusted data from 3.4.1 Validation of intermediate results Validation of statistical data Source data undergo a sequence of checks within NSIs. Eurostat checks national data mainly for completeness (coverage of reference periods and variables) and consistency (accounting consistency, time-consistency between QNA and ANA, and consistency over time) and follows up with NSIs on any lack of quality in this respect. The same checks are applied to data for the European aggregates. Validation against data from other domains is done on an ad-hoc basis, as is the validation of statistical tools used. 3.4.3 Assessment of discrepancies and other problems in statistical outputs Geographical consistency: European quarterly accounts can only rarely be checked for geographical consistency since not all Member States do compile a full set of quarterly accounts, and some do so only with important delays. Thus, they cannot be calculated by summing and must be estimated from the available data. The estimation, however, gives results whose development is consistent with that of the sum of Member States’ data. Please also note that consistency in summation cannot be expected from chain-linked series, but only from series at current prices or at prices of the previous year. Eurostat produces national accounts data series expressed in Euro/ECU and in National Currencies. For National Currency data of Euro-zone Member States, Eurostat's databases have been passed, after February 2002, from "old" to "new" (i.e. the Euro) national currency. These data in "new" national currency have been converted from the former national currency series by applying the irrevocably fixed Euro conversion rate to all quarters. This procedure ensures that national time series preserve their growth rates without exhibiting a break for the change of currency unit. Both series coincide for reference periods after the entry into the euro area. It should be noted, though, that even if these figures in national currency are all expressed in ("fixed") Euro, they must not be used for international comparisons. Only the Euro/ECU series (which do not use the fixed conversion rate for all quarters) can be used for that purpose. Data for Member States outside the Euro-zone are expressed in National Currency and in ECU/Euro as well. For those countries, the national currency series are expressed in their respective national money as before. The Euro/ECU series have been generated by applying the respective variable exchange rate of National Currency vs. ECU/Euro for reference periods until 31.12.1998. For later periods, the series are converted from national currencies to Euro by using the current exchange rate against the Euro, which happens to be the fixed conversion rate in the case of Euro-zone members and a variable rate in the case of those not belonging to the Euro-zone. Eurostat uses exchange rates provided by ECB and available (annual and quarterly) in the exchange rates domain of Eurostat's online database. |
| VI. Other Aspects |
| Footnotes | ||
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