National Accounts Quarterly National Accounts - a view of the crisis

1. National Accounts Quarterly National Accounts - a view of the crisis UCC 9 March 2011 Michael Connolly Integration and Large Cases Division, National Accounts

2. A Visual Guide to the Financial Crisis by Jess Bachman Jess from WallStats put this together for the Mint blog. I'm pretty sure they have him on retainer.

4. GDP – GNP Gap widening

5. European ComparisonsGDP Seasonally Adjusted, Chain Linked

6. Expenditure components of GDP (2009) GDP = C + I + G + X - M Exports 97% Consumption 52% Investment 11.8% Government 15.8% + + + - = GDP Imports 76.6% 6

7. Globalisation –Impact Exports & Imports of Goods and Services as % GDP - 2006

9. GDP by Sector of Origin (2009) = GDP

10. Proportions of GDP by Activity - Value Added Type 2002 - 2010

11. GDP by Sector of Origin/Expenditure Based – Bread Economy Miller buys wheat makes flour sells flour to baker for €2 per bag Baker buys flour and makes bread sells bread at €4 to shop Farmer grows wheat sells to miller @ €1 per bag Shop buys bread and sells it to customers at €6.00 • GDP by Sector of Origin : • Sum of value added :Farmer (€1) +Miller (€1) +Baker €2 • +Shopkeeper €2) = €6.00 = GDP Bread Economy • Expenditure Based GDP Estimate : • Total sales of Bread to Households = €6.00 = GDP Expenditure

12. How Do We Calculate Constant Prices? • Several methods • deflation of current price data • using CPI for example • extrapolation using volume index • using Industrial Production Index or RSI • double deflation • separately deflate outputs and inputs

13. Chain Linking - Rationale • Previously used a fixed base year (1995). • Each year’s GVA calculated to a base of previous year. • Benefit of more up-to-date weights than with fixed base calculations. • Year-on-year changes then linked together and GVA expressed in prices of reference year. • Components do not add to total GDP, as GDP is chain-linked separately using sum of components’ GVA’s at previous year prices. • Statistical discrepancy cannot be calculated.

14. Creating a Chain Linked Series of GDPreferenced to 2008 For 2003 Growth rate = 136,219/ 130,464 = 4.4% . Chain link 2003 to 2004 158,223/1.044 = 151,267

15. Inputs into National Accounts Macro Micro – Large Cases Unit Consistency of LCU data across survey areas Consistency of Prices data Consistency of administrative data - Corporation Tax and Trade Data • Balance of Payments • Industry and Services statistics • Prices data • Labour Market • Administrative data - Corp Tax etc. • Trade • FISIM

16. Globalisation –Impact Globalisation in the Irish Economy Irish economy has developed into a highly Globalised Economy For MNCs in Ireland top 10 account for 34% of value of exports and 33% of imports

17. Large Cases & Consistency Network Large Cases Unit &Consistency

18. Globalisation –Impact Employment in Industry 1985-2005

19. Industry Output - by ownership 1985 - 2005

20. Numbers Employed and Output per Head

24. Globalisation –Impact Summary and Conclusions • The quarterly National Accounts give a comprehensive picture of where the economy is positioned • Benefits from Chain linking of constant price data compared to fixed base year indexation • Extensive data sources obtained both within and outside of CSO • Strategy for dealing with MNC statistics through Consistency Unit • Distortions to Macro economic variables • GDP • Productivity