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National Income Accounts Of Pakistan

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  • 1. NATIONAL INCOME ACCOUNTS OF PAKISTAN
  • 2. NIAs of Pakistan• In Pakistan, NIA are prepared and released by the Federal Bureau of Statistics. The coverage is on National basis and Annual data.• GDP is measured through Product Approach and Expenditure Approach.• The latest information is available for FY 2008-09.• The NIAs are prepared on current and constant prices (to be explained)
  • 3. Measurement of GDP Product Approach • The Gross Domestic Product at current factor cost is derived by summing up the value added in the following major sectors and sub-sectors of the economy: – Agriculture • Crop Sector • Non-crop Sector – Mining and Quarrying – Manufacturing • Large Scale Remember!!!!! • Small and Household GDP (at Factor Cost) = ∑ VAs • Slaughtering – Construction – Electricity and Gas Distribution – Services (six in number)
  • 4. Measurement of GDP Expenditure Approach • The Gross Domestic Product at current market price is derived by adding expenditure on the following major heads: – Consumption • Private • General Government – Investment • Gross Fixed Capital Formation • Changes in Stock (Inventory Accumulation) – Exports of Non-factor Services – Imports of Non-factor Services • Gross Domestic Product (at market price) = Consumption + Investment + Exports (G&S) – Imports (G&S)
  • 5. Price Indexes• To measure inflation, which is the rate of change of prices, we need the concept of a price index.• A price index is a measure of the average level of prices for some specified set of goods and services, relative to the prices in a specified base year. Another term for price index is deflator.
  • 6. Price Indexes• A Variable-weight price index starts with the set of goods and services produced in the current period and compares today’s cost of those goods and services with what they would have cost in the base year. More precisely:• Variable-weight price index = value of current output at current prices value of current output at base-year prices
  • 7. Price Indexes• The second type of price index is a fixed-weight index. A fixed-weight price index measures how much a fixed basket of goods costs relative to a base period:• Fixed-weight price index = Value of fixed basket at current prices Value of fixed basket at base-year prices
  • 8. Real versus Nominal• GDP can also be The output of an entire economy expressed in either of these two ways.• Nominal GDP, also called current – dollar GDP, is the dollar value of an economy’s final output measured at current market prices.• Real GDP, also called constant-dollar GDP, is a measure of the physical volume of an economy’s final production.
  • 9. Real versus Nominal• GDP GDP by applying Real GDP is obtained from nominal the formula • Real GDP = [Nominal GDP/ GDP Deflator] – Where the GDP deflator is a price index that measures the average level of prices of goods and services included in GDP.• The components of GDP, consumption, investment, and government purchases can also be expressed in nominal or real terms, and each component has its own deflator.
  • 10. Example of Price• Deflator The Ratio of GDP at current price to GDP at Constant price (or base-year price) gives the value of GDP Deflator – an aggregate index of price level. PGDP = [GDP at Current Price/ GDP at Constant Price]*100 PGDP 07-08 = (9906/5493)*100 = 180.3 PGDP 06-07 = (8257/5192)*100 = 159.0 Inflation = [(180.3 – 159)/159]*100 = 13.4%
  • 11. Example of Price• Deflator The Ratio of GDP at current price to GDP at Constant price (or base-year price) gives the value of GDP Deflator – an aggregate index of price level. PGDP = GDP at Current Price GDP at Constant Price PGDP 07-08 = (9906/5493)*100 = 180.3*100 PGDP 06-07 = (8257/5192)*100 = 159.0 Inflation = [(180.3 – 159)/159]*100 = 13.4%
  • 12. Agriculture Sector (Value Added at Current Factor Cost)Sub-Sectors FY 06-07 FY 07-08 Growth Share in (Rs. Bn) (Rs. Bn) (%) GDP (%)Major Crops 584.2 696.1 19.2 7.1Minor Crops 194.6 221.5 13.8 2.4Live Stock 881.7 1031.8 17 10.9Forestry 35.1 44.3 26.4 0.3Fishing 22.5 23.1 3 0.2Total 1698 2017 18.8 20.9
  • 13. Agriculture Sector (Value Added at Constant Factor Cost of 1999- 2000)Sub-Sectors FY 06-07 FY 07-08 Growth Share in (Rs. Bn) (Rs. Bn) (%) GDP (%)Major Crops 400.8 388.9 -3 7.1Minor Crops 124.9 131 4.9 4.9Live Stock 577.4 599.2 3.8 3.8Forestry 16.6 18.4 10.8 11Fishing 12.4 11.3 -8.9 -8.5Total 1132 1149 1.5 1.5
  • 14. Implicit Price Deflators and Inflation: Agriculture Sector Economic Survey 2007-08 Current Price Constant Price DeflatorSub-Sectors FY 06-07 FY 07-08 FY 06-07 FY 07-08 FY 06-07 FY 07-08 Inflation (Rs. Bn) (Rs. Bn) (Rs. Bn) (Rs. Bn) (%)Major Crops 584.2 696.1 400.8 388.9 145.8 179.0 22.8Minor Crops 194.6 221.5 124.9 131 155.8 169.1 8.5Live Stock 881.7 1031.8 577.4 599.2 152.7 172.2 12.8Forestry 35.1 44.3 16.6 18.4 211.4 240.8 13.9Fishing 22.5 23.1 12.4 11.3 181.5 204.4 12.7Total 1698 2017 1132 1149 150.0 175.5 17.0
  • 15. Industrial Sectors (Value Added at Current Factor Cost)Sub-Sectors FY 06-07 FY 07-08 Growth Share in (Rs. Bn) (Rs. Bn) (%) GDP (%)M&Q 251.7 306.7 21.8 2.5Manufacturin 1566.1 1892.8 20.9 18.9gLarge S Mfg 1148.4 1404.2 22.3 13.3Small S Mfg 279.9 331.6 18.5 4.4Slaughtering 137.8 157.0 13.9 1.3Construction 213.7 277.1 29.7 2.7E & G Distn 165.2 158.6 -4.0 1.7Industrial 25.9Sector
  • 16. Industrial Sectors (Value Added at Constant Factor Cost)Sub-Sectors FY 06-07 FY 07-08 Growth Share in (Rs. Bn) (Rs. Bn) (%) GDP (%)M&Q 132.3 138.8 4.9 2.5Manufacturin 987.6 1040.9 5.4 18.9gLarge S Mfg 694.8 728.4 4.8 13.3Small S Mfg 223.3 240.1 7.5 4.4Slaughtering 69.4 72.3 4.2 1.3Construction 127.6 147.0 15.2 2.7E & G Distn 110.1 93.9 -14.7 1.7Industrial 1357.5 1420.5 4.6 5493Sector
  • 17. Implicit Price Deflators and Inflation: Industrial Sector Current Price Constant Price DeflatorSub-Sectors FY 06- FY 07- FY 06- FY 07- FY 06- FY 07- Inflation 07 (Rs. 08 (Rs. 07 (Rs. 08 (Rs. 07 (Rs. 08 (Rs. (%) Bn) Bn) Bn) Bn) Bn) Bn)M&Q 251.7 306.7 132.3 138.8 190.2 221.0 16.1Manufacturi 1566.1 1892.8 987.6 1040.9 158.6 181.8 14.7ngLarge S Mfg 1148.4 1404.2 694.8 728.4 165.3 192.8 16.6Small S Mfg 279.9 331.6 223.3 240.1 125.3 138.1 10.2Slaughtering 137.8 157 69.4 72.3 198.6 217.2 9.4Construction 213.7 277.1 127.6 147 167.5 188.5 12.6E & G Distn 165.2 158.6 110.1 93.9 150.0 168.9 12.6
  • 18. Services Sector (at current factor cost) 2006-07 2007-08 Growth Share inServices (Rs. Bn) (Rs. Bn) (%) GDP (%)Transport Storage &Communication 1,030 1,174 14.0 11.9Wholesale & Retail Trade 1,433 1,760 22.8 17.8Finance & Insurance 452 583 29.0 5.9Ownership of Dwellings 206 236 14.4 2.4Public Admin & Defence 458 578 26.1 5.8Social Services 766 923 20.5 9.3Total Services 4345 5254 20.9 53.0
  • 19. Services Sector (at constant factor cost) 2006-07 2007-08 Growth Share inServices (Rs. Bn) (Rs. Bn) (%) GDP (%)(%)TransportStorage &Communication 528 552 4.4 10.0Wholesale & RetailTrade 883 940 6.4 17.1Finance & Insurance 305 357 17.0 6.5Ownership ofDwellings 141 146 3.5 2.6Public Admin &Defence 323 358 10.9 6.5Social & CommunityServices 522 571 9.4 10.4Total Services 2,703 2,923 8.2 53.2
  • 20. Implicit Price Deflators and Inflation: Services Sector Current (FC) Constant (FC) Deflator Services 2006-07 2007-08 2006-07 2007-08 2006-07 2007-08 InflationTransport Storage & Communication 1030 1174 528 552 194.8 212.8 9.2Wholesale & Retail Trade 1433 1760 883 940 162.2 187.3 15.5Finance & Insurance 452 583 305 357 148.1 163.3 10.2Ownership of Dwellings 206 236 141 146 146.6 162.1 10.5Public Admin & Defence 458 578 323 358 141.8 161.3 13.8Social Services 766 923 522 571 146.6 161.6 10.2Total Services 4345 5254 2703 2923 160.7 179.7 11.8
  • 21. Revisions/ Re-basing in Pakistan• The earlier version of the UN System of National Accounts (SNA) was published in 1953 and its latest edition was completed in 1993.• Adoption of UN SNA ensures consistency of estimates and allows meaningful international comparison.• Besides proving measures of production, income, consumption, savings, capital formation and their financing for individual sectors and for the economy, it also provides linkages with various monetary and quantitative databases through satellite accounts.
  • 22. Revisions/ Re-basing in Pakistan• The first estimates of NIA of Pakistan were prepared in 1949 by Economic Advisor’s Office.• The task was the entrusted to CSO which has now become FBS.• Two earlier efforts in 1960s (NI Commission 1963, and IBRD Statistical Mission 1969) resulted into significant headway with regard to timeliness, data availability, coverage, and statistical techniques to prepare estimates.• The initiative to switch base from 1959-60 to 1969-70 could not materialize due to enormous inconsistencies in the manufacturing data.• The next attempt to revise base to 1975-76 also met a similar outcome.
  • 23. Revisions/ Re-basing in Pakistan• The third attempt for re-basing to 1980-81 succeeded and the revision was completed in 1988.• The most recent attempt to switch to a more recent base of 1999-2000 was completed in 2003.• As part of the job, a number of studies on all sub-sectors of the economy were prepared by the FBS staff as well as external consultants.• The final document explaining in detail the differences in 1999-2000 and 1980-81 accounts is available on FBS website. It is an important document for understanding the concept and policy planning.
  • 24. Comparative Position 1999-2000 1980-81 Base Percentage Base ChangeAgriculture 923,609 779,692 18.5 (26.2) (26.4)Industrial 798,190 676,369 18.0 (22.6) (22.9)Services 1807,546 1495,927 20.8 (51.2) (50.7)GDP (Rs. Million) 3529,345 2951,988 19.6Figures in parentheses are shares in GDP
  • 25. Repeated Revisions in GDP (at current market prices) GDP (MP) Data from Different Issues of the Economic Survey FY 1999-00 2000-012001-022002-032003-042004-052005-062006-072007-081999-00 3,174 3,183 3,147 3,147 3,793 3,793 3,826 3,826 3,8262000-01 3,472 3,416 3,423 4,163 4,163 4,210 4,210 4,2102001-02 3,727 3,629 4,402 4,402 4,453 4,453 4,4532002-03 4,018 4,821 4,823 4,876 4,876 4,8762003-04 5,458 5,533 5,641 5,641 5,6412004-05 6,548 6,581 6,500 6,5002005-06 7,713 7,594 7,6232006-07 8,707 8,7232007-08 10,478 End of Lec 4 and 5
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