Tracking the Trends

Friday 15th December 2000

Real GDP

Annual per cent change

TRACKING the ECONOMY

September quarter growth set to rise

NZIER expects September quarter gross domestic product to rise about 0.9% on a seasonally adjusted basis. The rebound in GDP from a weak June quarter will be underpinned by strong growth in agriculture. Dairy and meat production have reaped the benefits of favourable weather conditions.

Growth in other sectors of the economy is expected to be more subdued. This reflects weaker domestic demand conditions.

National accounting in a nutshell

The mention of national accounting is usually enough to generate a yawn among most people but the importance of the country's national accounts cannot be overlooked. National accounts are essentially accounts that measure aggregate economic activity or GDP. Because of the complexity in measuring activity, official GDP figures are often released around two months following the quarter of interest.

National accounts are computed using a range of surveys and censuses carried out regularly by Statistics New Zealand. The accounts are compiled in line with guidelines outlined by the UN. These guidelines establish a standard national framework and are referred to as the System of National Accounts (SNA). The SNA framework makes national accounts comparable between countries.

GDP can be measured using three methods:

Production measure: This is the total value of goods and services produced in New Zealand, less "intermediate consumption," which includes those goods and services used by firms in the production process.
Expenditure measure: This is based on final demand. It includes total purchases of goods and services in the private and government sector plus investment (gross fixed capital formation) plus the change in stocks, minus imports.
Income measure: Total income earned from the current production of goods and services, including salaries and wages, and operating surplus (profit).

Theoretically, all three measures of GDP should produce the same final GDP figure. However, this is not generally the case as measurement problems can result in discrepancies.

History left unchanged

In late November, Statistics New Zealand released revised figures for GDP calculated using the production method (series using the expenditure method are due out soon). The upgraded figures include a number of changes. The main changes are:

The upgraded national accounts are produced using guidelines published by the UN in 1993. Before this, SNA 1968 was used.
Previously the constant price series were calculated using a fixed weight index. This could result in difficulties with the constant price series if the weights were not regularly updated. This was evident in the SNA 1968 series for computer investment. The upgraded constant price accounts are prepared using an annual chain volume index. The weights are updated yearly.
Industry classifications are now prepared using the Australian New Zealand standard industry classification (ANZSIC). This has replaced the New Zealand Standard Industry Classification.
Capital stock values provide a measure of national wealth and also a measure of "productive" capital stock.

The revisions have not had a significant impact on overall GDP growth (see chart), and history has remained relatively unchanged. However, differences have occurred at a detailed level, including the industry level.

- Compiled by Lisa Yee

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