D2,2.philippines country practices

MEASURING THE
GROSS REGIONAL EXPENDITURES (GRDE)
IN THE PHILIPPINES
by VIVIAN R. ILARINA National Statistical Coordination Board Philippines International Workshop on Regional Products and Income Accounts Beijing China, 15-17 March 2010

Introduction
a. Brief History
b. Salient Features of the Present GRDE
c. Compilation Process
II. The Gross Regional Domestic Expenditures
a. Scope and Coverage
b. Sources of Data
c. Estimation Methodology
d. Measurement Issues
III. Way Forward
Outline of the Presentation

Brief History
The Philippine System of National Accounts (PSNA)
The has been continuously compiled for almost
63 years now which started in 1947 – for the annual
national accounts and in 1983 for the quarterly national
accounts;
The National Statistical Coordination Board (NSCB) which
is task with the compilation of the PSNA has started
development of the GRDE in 1987 – much later after
the start of the GRDP in 1971;
I. Introduction

1987 is also a milestone in the PSNA as this starts the
regular publication of the GRDE on an annual basis;
The first release of the GRDE was at base year 1972
and an overall revision / rebasing of the GRDE
was undertaken in 1990 with the shift of the base year
to 1985 and improved estimates.

B. Salient Features of the Present GRDE
The GRDE is intended to complement the current
series of the GRDP to be able to provide measures
of the regional economy at the production and
expenditure sides of the national accounts;
While the compilation of the GRDE started in 1987, this is
still in its developmental stage since the NSCB is
constantly improving the GRDE by coordinating with
various agencies for the improvement of data support
for this set of accounts;

The present GRDE is at base year 1985; still follows
the recommendations of the 1968 UNSNA;
The 2009 GRDE publication is covering the period 2006,
2007 and 2008;
The GRDE has a lag time of one year – that is, data
becomes available in the publication after one year;
The GRDE release is first week August of each current
year.

C. Compilation Process of GRDE
The GRDE starts from the national level estimates.
GDP at the expenditure side is compiled as :
1. Personal Consumption Expenditures (PCE)
Plus 2. Government Consumption Expenditures (GCE)
Plus 3. Gross Domestic Capital Formation (GDCF)
a. Fixed Capital
a.1. Construction
a.2. Durable Equipment
a.3. Breeding Stocks
b. Changes in Stocks
Plus 4. Exports
a. Merchandize Exports
b. Non-Merchandize Exports
Plus 5. Imports
a. Merchandize Imports
b. Non-Merchandize Imports
EQUALS EXPENDITURES ON GROSS DOMESTIC PRODUCT

For the Gross Regional Domestic Expenditures, the following are estimated separately by region namely: 1. Personal Consumption Expenditures (PCE) 2. Government Consumption Expenditures (GCE) 3. Construction 4. Durable Equipment 5. Breeding Stocks, Orchard Development & Afforestation

The rest of the expenditure items below are estimated as residual : 1. Exports 2. Imports and 3. Changes in Stocks The residual estimates also includes the statistical discrepancy between the production and the expenditure sides of GDP. The GRDE starts with the national estimates as control total and these are allocated among regions using appropriate regional indicators.

THE COMPILATION OF THE GRDE a. Scope and Coverage (operational) b. Major sources of data c. Estimation Methodology d. Some Measurement Issues II. The Gross Regional Domestic Expenditures (GRDE)

1.Personal Consumption Expenditures
a.Scope and Coverage:
- includes the final consumption expenditures of
individual households, institutional households,
and private non-profits institutions serving
households.
b. Source of data : Family Income and
Expenditure Survey (FIES) by region which is
conducted by the National Statistics Office
(for benchmark estimates)

PCE is classified by item of expenditures namely:
1. food
2. beverage
3. tobacco
4. clothing and footwear
5. fuel, light and water
6. household furnishings
7. household operations
8. transportation and communications
9. miscellaneous expenditures like medical and
health expenses, personal care, etc.

c. Estimation Methodology:
Benchmark : Regional distribution of total expenditures from Family Income and Expenditure Surveys (FIES) – serves as indicator to allocate national level estimates.
Annual: trend extrapolation of regional estimates resulting from modified commodity flow method
by region using indicators used on production
coming from the GRDP.

Deflator: Consumer Price Index by region
(average of all items for each region)
d. Measurement Issues:
The estimation of PCE at the regional level pose limitations for the replication of the methodology used at the national level because of the unavailable data for regional estimates.
It is assumed that the distribution of the final
expenditures of NPISH is the same as the household
expenditure distributions.

2. General Government Consumption
Expenditures
a. Scope and Coverage :
includes central (or national) government;
local government and social security
agencies
b. Sources of data:
a. For national and local govt - financial
report from the Commission on Audit (COA)
b. For social security agencies – financial
report from the Social Security System (SSS)
and the Government Service Insurance System
(GSIS)

d.Estimation Methodology:
Regional for government consumption expenditures are coming from the Commission on Audit (COA).
When data are not available from COA, data on regional program of expenditures from the Department of Budget and Management (DBM) are used.
Deflator: Average Earnings Index – computed at national level is the same index used for all regions. CPI by region for maintenance and operating expenses.

3. Construction
a. Scope and Coverage:

Classified into public construction and private
construction;
- Public construction - are construction done by national
government, local government, and government
corporations;
- Private construction - are residential construction and
non-residential construction

b. Sources of data:
1. For public construction – annual financial
reports from Commission on Audit; the
Budget of Expenditures and Sources of
Financing (BESF) of the Department of Budget and
Management (DBM)
2. For private construction – report on building
permits compiled by the National Statistics Office (NSO)

1. Regional public construction - Estimated only
for physical accomplishment of contruction
put in place;
2. Regional private construction – Estimates for
residential and non-residential; used the
S-curve to estimate percentage distribution
of physical accomplishments for the period.
Deflator:
Regional CPI for housing and maintenance
provides the regional differentials applied to the
composite price index at the national level.

d. Measurement Issues:
1. Regional allocation of the sector’s
output among regions is based on indicator
of regional distribution as estimated from the
gross valued added of public and private
construction;
2. Undercoverage for private construction
which is based from building permits
is assumed to be uniform across regions
because there is no data currently available
to estimate the undercoverage ratio by
region.
3. For public, the national deflator used is used for all
regions.

4. Durable Equipment
-consists of outlays for new and used capital
goods such as machinery and equipment
acquired by all resident producers less sales
or transfers of used capital goods;
- covers machinery specialized for particular industries,
general industrial machinery and equipment, transport
equipment and miscellaneous equipment.

b. Sources of data:
For imports of durable equipment – foreign
trade statistics compiled by the National
Statistics Office (NSO);
For domestic production – census and
survey of establishments conducted by the
National Statistics Office (NSO).

1. Regional indicators are obtained from the regional
pattern of expenditure on equipment are resorted
which are generated from the establishment census
and surveys.
Deflator – the same deflator is used for
national estimates and regional estimates
which is the Wholesale Price Index.
2. This assumes that for most capital goods price
determination is more a function of the uniqueness
of the equipment rather than its geographical
placement.

d. Measurement Issue:
The commodity Flow Method as applied at the
national level estimate can not be used at the
regional estimates since available data for the
region can not fully support the methodology.

5. Breeding Stocks, Orchard Development and
Afforestation
- Breeding Stocks: refer to outlays on livestock and
poultry raised as breeders, draught, milking,
layers;
- Orchard Development: refers to outlays on the
cultivation of plantations until they become
productive;
- Afforestation : cultivation of forest trees in newly
created forest areas.

b. Sources of data :
1. Bureau of Agricultural Statistics – for data
on inventory of livestock and poultry;
cost of production studies on total cost
per hectare for the development/main-
tenance of plantations;
2. National Statistics Office – from the Census
of Agriculture, data used are ratios of animals
used as capital formation and data on total
areas devoted to permanent crops.

c. Estimation Methodology

Breeding Stocks
1. Estimates makes use of indicators on regional
data on inventory and regional prices used
for breeding stocks, milking, laying and
work animals.
2. The regional ratios to determine the
number of animals used for capital
formation are based on the Census of
Agriculture.
Deflator - Regional farm gate prices for
each type of animals

Estimation Methodology : Orchard Development a. Estimates makes use of indicators on regional data on the distribution of value of production of major plantation crops. Measurement Issues: a. Regional distribution follows the gross value added by region.

Estimation Methodology
Afforestation
a. Estimates makes use of indicators on regional
data on expenditures incurred by private
enterprises and government as reported by
the Forest Management Bureau (FMB)
Deflator
Regional cost per hectare reforested
translated into an index.

6. Changes in Stocks
- Stocks includes:
Materials & Supplies
Work-in-progress
Finished Goods
Goods for Resale

a. Scope and Coverage: Changes in Stocks Agriculture Non-Agriculture Government
Rice
Corn
Sugar
Crude
Petroleum Products
Trade
Manufacturing /
Other Establishments
National
Local
Gov’t Corporations

Bureau of Agricultural Statistics (BAS) - data on quarterly volume
of production and inventory of rice and corn at the beginning of each month, wholesale prices of rice and corn
b. Sugar Regulatory Board (SRA)- data on quarterly production, imports, exports, consumption and prices of sugar
c. Foreign Trade Statistics (FTS), NSO- Exports and Imports of Rice and Corn
d. Department of Energy (DOE)- monthly inventory and prices of crude and petroleum products
e. Commission on Audit (COA)- annual data on inventories of national, local government and government corporations
b. Sources of data :

1. Regional estimates are done separately for the agriculture and non-agriculture sectors. 2. Agriculture estimates used as regional indicators the stocks held by households, commercial and National Food Authority 3. Non-agriculture estimates used as regional indicators the inventory held by industrial and non-industrial sectos particularly the finished goods held by manufacturing, mining and quarrying establishments.
c. Estimation Methodology :

Agricultural inventory – by farm gate prices Non-agricultural inventory – by implicit price index at the national level and distributed into regions using as indicator the CPI.
Deflator
d. Measurement Issue:
As in the case of durable equipment, estimates of changes
in stocks for non-agricultural industries use the establisment
based data and household stocks are not adequately
captured.

7. Exports and Imports
In the absence of regional trade flow, net exports is derived
as a residual item.
Hence, net exports refers to the combined effect of the
income flows between regions, the commodity flows between
regions and the rest of the world and the
statistical discrepancy.

With the on-going Revision and Rebasing of the National
Accounts, the present GRDE is also undertaking the same
activities to consider the following for the release of the
new GRDE series from 1998 to 2009:
Base Year 2000
New Classification Systems –
- Philippine COICOP
- Philippine PSCC
Adoption of the 1993 SNA concepts
Use of update data and parameters
III. Way Forward

Thank you very much ! URL: http://www.nscb.gov.ph e-mail: [email_address]

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D2,2.philippines country practices — Presentation Transcript