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CATASTROPHIC NATURAL DISASTER AND NATIONAL ACCOUNTS: JAPAN’S EXPERIENCE

Explore the impact of the devastating earthquake on Japan's national accounts data, the challenges faced in data compilation, and the innovative solutions implemented to ensure accurate economic estimates.

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CATASTROPHIC NATURAL DISASTER AND NATIONAL ACCOUNTS: JAPAN’S EXPERIENCE

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  1. CATASTROPHIC NATURAL DISASTER AND NATIONAL ACCOUNTS: JAPAN’S EXPERIENCE Working Party on National Accounts, OECD, Paris 25-28 October, 2011 Kosuke SUZUKI Department of National Accounts Economic and Social Research Institute Cabinet Office of Japan

  2. OUTLINE OF THE GREAT EAST JAPAN EARTHQUAKE • Occurred at 2:46 pm (JST) on 11 March • Epicenter: ｔhe northeast of Japan • Seismic scale: M 9.0 • The extent of damage • Around 20,000 are dead or missing • More than 70,000 are still living in temporary shelters. • Amount of damage in tangible assets: 16.9 trillion yen ($ 220 billion) • cf. Japan’s nominal GDP in 2010: 479 trillion yen

  3. OUR CHALLENGES: PAST AND FUTURE • Source data problems • Delay • Missing • Modification in compilation methodology • Projection • Adjustment • Scope • Conceptual issues • Treatment of unusual economic transactions • User Communication

  4. SPECIAL TREATMENT IN QUARTERLY NATIONAL ACCOUNTS: OVERVIEW • Quarterly National Accounts in Japan • GDP (expenditure side), its components, and compensation of employees • Release schedule • Advance estimates: after approx. 1 month and 2 weeks • Revised estimates: after approx. 2 months and 10 days • Advance GDP estimates for the first quarter of 2011 were due out on 19th of May…

  5. SPECIAL TREATMENT IN QUARTERLY NATIONAL ACCOUNTS: PROJECTION • Mechanical projection in the advanced estimates • In advanced estimates, some data for the third month of the reference quarter cannot be obtained. • Huge deviations were obviously expected… • WE NEEDED to maintain the accuracy of our estimates and to avoid a later big revision. • Usage of alternative data • Other proxies • Data published by private business associations • Anecdotal information

  6. FIGURE 1: UNPRECEDENTED FLUCTUATION IN SOURCE DATA An illustration: Sales of Amusement and Theme Parks (Source) “Survey of Selected Service Industries” (METI). Trend estimate is calculated by author.

  7. FIGURE 2: REVISION TO THE ADVANCE ESTIMATES Comparison of growth rates for Q1 2011

  8. SPECIAL TREATMENT IN QUARTERLY NATIONAL ACCOUNTS: SOURCE DATA • Revised GDP estimates are calculated using “Financial Statements Statistics of Corporations by Industry” (FSSCI, Ministry of Finance). • Investment and inventory series • Revised GDP estimates were due out on 9 June. • Delay in FSSCI publication • Provisional results for Q1: 2 June • Final results for Q1: 29 July • Adjustment in investment estimation • Revision to private investment: -1.3% → -1.4%

  9. SPECIAL TREATMENT IN QUARTERLY NATIONAL ACCOUNTS: OTHER ISSUES • Adjustment in parameters • Work-in-progress of housing construction, etc. • Conceptual Issues • Example: clearance of rubble • User communication: advance announcement • Timing • 27 April for the advance estimates (published 19 May) • 1 June for the revised estimates (published 9 June) • Contents

  10. ISSUES FOR ANNUAL ESTIMATES • Annual National Accounts in Japan • Fiscal year: from April to March of next year • Released in winter of next year • Estimates for Fiscal 2011 will be due out in December 2012/January 2013 • Items we need to tackle: • Source data problems • Reconsideration of estimation methodology/scope • Example: treatment of “transfers” • Conceptual issues • Example: estimation of nonlife insurance services

  11. IMPLICATION/ISSUES FOR DISCUSSION • Good opportunity to review current estimation framework • Dealing with source data problems • Adjustment in estimation methods • Revisiting conceptual issues • There is also a need to consider data sources and estimation methods for new items. • Improvement in public relations • Conceptual issues: some borderline cases • Are benefits in kind to victims collective or individual consumption?

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