10.4 National accounts

10.4.1 System of National Accounts (SNA)

The System of National Accounts (SNA) is the internationally agreed standard set of recommendations on how to compile measures of economic activity. The central role of national accounts (NA) based on the SNA is critical. There is no other such widely accepted and powerful integrating tool for social and demographic statistics. Its use in identifying weaknesses and gaps in basic statistics is clear. Moreover, its role extends beyond the production of data on the condition of the economy at regular intervals. Part and parcel of estimating the broad macroeconomic aggregates is the related task of taking an inventory of, and influencing, the corresponding incoming economic data.

The SNA describes a coherent, consistent and integrated set of macroeconomic accounts in the context of a set of internationally agreed concepts, definitions, classifications and accounting rules.

In addition, it provides an overview of economic processes, recording how production is distributed among consumers, businesses, government and foreign nations. It shows how income originating in production, modified by taxes and transfers, flows to these groups and how they allocate these flows to consumption, saving and investment. Consequently, the national accounts are one of the building blocks of macroeconomic statistics, forming a basis for economic analysis and policy formulation.

As a conceptual framework, the SNA provides an overarching framework for standards in other economic statistics domains, facilitating the integration of these statistical systems to achieve consistency with the national accounts.

It does this by defining the basic elements of economic statistics such as definition of units; valuation principles; accounting rules; the production boundary; and the assets boundary etc. This approach means that data from many collections can be, and indeed are, utilized to populate the National Accounts in countries. Indeed, as the SNA is a conceptual standard (as opposed to a collections standard) data from numerous sources, including non-survey data sources, can be integrated into the accounts. As such, the National Accounts are well placed to take advantage of administrative data and other (including big) data sources.

The SNA is intended for use by all countries, having been designed to accommodate the needs of countries at different stages of economic development. Another strength is that the articulation of the SNA is sufficiently robust that a great deal of flexibility can be applied in its implementation while still retaining integrated, economically complete and internally consistent accounts.

The SNA exhibits another form of flexibility by incorporating the concept of satellite accounts that are intended for special purposes without altering the SNA’s globally accepted framework. Many NSOs use satellite accounts to provide alternative views of economic activity that their national users require. Examples are the Tourism Satellite Accounts (further discussed in Chapter 10.8.1 — Concept, frameworks and guidelines) and the Non-Profit Institution Satellite Accounts.

The international community is also taking advantage of this flexibility to build standards that link the traditional economic focus of the SNA to other related areas of policy need. An important example is the development of the System of Economic-Environmental Accounts (further discussed in Chapter 10.6.1 — System of Environmental Economic Accounting), an accounting framework that integrates economic and environmental data using concepts, definitions and classifications consistent with the SNA. Another example is the development of Labour Accounts that link the National Accounts to labour market outcomes (further discussed in Chapter 10.8.1 — Concept, frameworks and guidelines).

System of National Accounts 2008

The most recent version of the SNA is the System of National Accounts 2008 (2008 SNA). It is the fifth version of the SNA, the first of which was published in 1953. The 2008 SNA does not include any fundamental or comprehensive changes that would impede a smooth transition from the use of the previous version, namely the 1993 SNA (discussed in the next subsection). Furthermore, consistency with related manuals, such as those on the balance of payments, government finance statistics and monetary and financial statistics, was an important consideration in the update.

The 2008 SNA starts with an introduction and an overview and then presents the accounting rules, the accounts and tables, and their integration. These subjects are the topics of Chapters 1-17. Chapters 18 to 29 elaborate on various aspects of the accounts provide details about their presentation and describe some possible extensions to improve the usefulness of the accounts for a wide range of purposes.

The European Union, has published the European system of national and regional accounts (ESA) 2010 (🔗), which is a version of the 2008 SNA tailored to the EU’s specific needs.

Countries sometimes publish the concepts, sources and methods they use in compiling their national accounts. These are invariably based on, but may not implement precisely, the SNA 2008 or earlier versions. An extract from such a publication is presented below. It contains a nice summary of what a user needs to know about the national accounts.

As detailed in the Australian System of National Accounts Concepts, Sources and Methods 2015 (🔗), the Australian System of National Accounts (ASNA) is based on the international standard 2008 SNA and the BPM6. It provides a systematic statistical framework for summarising and analysing economic events, the wealth of an economy, and its components.

The principal economic events recorded in the national accounts are production, consumption, and accumulation of wealth. The national accounts also record the income generated by production, the distribution of income among the factors of production and the use of the income, either for consumption or acquisition of assets. Additionally, they record the value of the economy’s stock of assets and liabilities, and the events, unrelated to production and consumption that bring about changes in the value of the wealth stock. Such events can include revaluations, write-offs, growth and depletion of natural assets, catastrophes, and transfers of natural assets to economic activity.

The national accounting framework comprises a set of accounts that are: balanced using the principles of double-entry accounting and fully integrated in that there is a balance between the value of assets and liabilities at the beginning of an accounting period, the transactions and other economic events that occur during the accounting period, and the closing values of assets and liabilities.

Accounts for the economy as a whole are supported by accounts for the various sectors of the economy, such as those relating to the government, households and corporate entities. The framework also embraces other, more detailed, accounts such as financial accounts and input and output (I-O) tables. It also provides for additional analyses through social accounting matrices and satellite accounts designed to reflect specific aspects of economic activity such as tourism, health and the environment. By applying suitable price measures, the national accounts can be presented in volume terms as well as in current prices. The national accounts’ time series can also be adjusted to remove seasonal distortions and to disclose trends.

In general terms, the main purpose of the national accounts is to provide information that is useful in economic analysis and formulation of macroeconomic policy. The economic performance and behaviour of an economy as a whole can be monitored using information recorded in the national accounts. National accounts data can be used to identify causal relationships between macroeconomic variables and can be incorporated in economic models used to test hypotheses and make forecasts about future economic conditions. Using national accounts data, analysts can gauge the impact of government policies on sectors of the economy, and the impact of external factors such as changes in the international economy. Economic targets can be formulated in terms of major national accounting variables, which can also be used as benchmarks for other economic performance measures, such as tax revenue as a proportion of gross domestic product or government contribution to national saving. Provided that the national accounts are compiled according to international standards, they can be used to compare the performance of the economies of different nations.

In addition, the full range of information available from a comprehensive national accounting system can serve purposes well beyond immediate concerns of macroeconomic analysts. For example, national accounts information can be used to analyse income and wealth distribution, financial and other markets, resource allocation, the incidence of taxes and welfare payments, environmental issues, productivity, industry performance, etc.

Surveys and other statistical systems that employ the concepts in the national accounting framework produce information that is consistent with the national accounts and with other statistics that are based on the national accounts framework.

System of National Accounts 1993

The System of National Accounts 1993 (1993 SNA) was the fourth version of the SNA, a significant update of the 1968 version. Many countries are still using the 1993 SNA.

10.4.2 Other related manuals and guidelines

The SNA is accompanied by numerous manuals and guidelines dealing with various aspects of its implementation and extension. The most important of these are presented below.

Quarterly National Accounts Manual, 2017 IMF

The IMF Quarterly National Accounts Manual (🔗) provides conceptual and practical guidance for compiling quarterly national accounts (QNA) statistics. It offers a comprehensive review of data sources, statistical methods, and compilation techniques to derive official estimates of quarterly GDP. The 2017 edition, which upgrades the first edition (🔗) published in 2001, improves and expands the previous content based on recent methodological advances, best country practices, and suggestions from QNA compilers and experts.

The Manual provides an internationally accepted framework for producing QNA data. It is fully consistent with the 2008 SNA. Countries should consider the Manual a companion guide to the 2008 SNA regarding specific aspects of quarterly GDP compilation. The methodology and concepts described in the Manual are also consistent with those of other statistical manuals produced by the IMF Statistics Department, including the BPM6 (discussed below), the Government Finance Statistics Manual 2014 (🔗), and the Monetary and Financial Statistics Manual and Compilation Guide (🔗). The 2001 version of the Manual (🔗) is still available for countries using the 1993 SNA.

Essential SNA: Building the Basics, 2014, Eurostat

The Eurostat Essential SNA Handbook (🔗) supports the successful implementation of the 2008 SNA, providing instruments to support analysis of basic data when preparing national accounts statistics for the first time or improving the existing situation. The 2014 handbook develops the work undertaken over the previous four years. It includes the most recent developments of the Inter-secretariat Working Group on National Accounts (ISWGNA) and its work on monitoring 2008 SNA implementation.

Handbook on Supply, Use and Input-Output Tables with Extensions and Application, 2018, UNSD

The UNSD Handbook on Supply, Use and Input-Output Tables (🔗) was updated to refer to the latest versions of the international standards, in particular, the 2008 SNA and the BPM6. It is one of a series of handbooks on national accounting (presented below in this subsection) that supports the 2008 SNA. Its objective is to provide step-by-step guidance for the compilation of supply and use tables (SUTs) and input-output tables (IOTs) and an overview of the possible extensions of SUTs and IOTs that increase their analytical usefulness. The 1999 Handbook of Input-Output Table Compilation and Analysis (🔗) is still available for countries using 1993 SNA.

Handbook of National Accounting: Financial Production, Flows and Stocks in the System of National Accounts, 2014, UNSD

The UNSD Handbook of National Accounting: Financial Production, Flows and Stocks in the System of National Accounts (🔗) provides practical guidance on the calculation and allocation of the production of various types of financial services and issues related to the compilation of the financial account and balance sheets by institutional sector in the context of from-whom-to-whom relationships.

Satellite Account on Non-profit and Related Institutions and Volunteer Work, 2018, UNSD

The UNSD Handbook on Satellite Account on Non-profit and Related Institutions and Volunteer Work (🔗) is an update of the Handbook on Non-Profit Institutions (NPIs) in the System of National Accounts (United Nations, 2003) (🔗). It reflects the most recent revisions of the underlying international economic accounting standards (notably the 2008 SNA) and classifications (notably ISIC Rev. 4), and experiences and country practices in implementing the guidelines for NPI satellite accounts. The Handbook brings various efforts together to offer comprehensive methodological guidance for creating, in a manner that is compatible with the 2008 SNA, a coherent satellite account on what is called the ‘third sector’, or ‘social economy sector’ (abbreviated ‘TSE sector’) that embraces three components:

• NPIs that are not controlled by the government;

• certain related institutions that are not controlled by the government, including in-scope cooperatives, mutual societies, and social enterprises; and

• volunteer work.

Guidelines on Integrated Economic Statistics, 2013, UNSD

The UNSD Guidelines on Integrated Economic Statistics (🔗) provide practical guidance on advancing consistency, coherence and reconciliation of statistical information by applying the methodology of integrated economic statistics using the System of National Accounts 2008 as the overarching conceptual framework. The Guidelines also provide case studies and other practical material to share experiences in implementing an integrated statistical production approach in national statistical systems.

Handbook of National Accounting: Household Accounting Experience in Concepts and Compilation, Vol.1: Household Sector Accounts, 2000, UNSD

Volume 1 of the UNSD Handbook of National Accounting: Household Accounting Experience in Concepts and Compilation (🔗) focuses on household sector accounts and their possible extensions described in the 1993 SNA. (It is also useful for countries using 2008 SNA.) It describes the experiences of countries with regard to conceptual and compilation issues of the household sector and satellite accounting. It focuses on the concept of the informal sector, presents country and case studies on the compilation of household sector accounts, and describes the links of the household sector with other selected sectors.

Handbook of National Accounting: Household Accounting Experience in Concepts and Compilation, Vol.2: Household Satellite Extensions, 2000, UNSD

Volume 2 of the UNSD Handbook of National Accounting: Household Accounting Experience in Concepts and Compilation (🔗) focuses on household sector accounts and their possible extensions described in the 1993 SNA. (As for Volume 1, it is also useful for countries using 2008 SNA.) It describes the experiences of countries with regard to conceptual and compilation issues of the household sector and satellite accounting. It is primarily devoted to various types of household satellite accounting, including labour accounting and socio-economic accounting. It also describes various social indicators, problems in measuring them and potential data sources.

Handbook of National Accounting: Links between Business Accounting and National Accounting, 2000, UNSD

The UNSD Handbook of National Accounting: Links between Business Accounting and National Accounting (🔗) refers to SNA 1993 but is still applicable for countries using the 2008 SNA. It covers the conceptual and practical aspects of linking business accounts to national accounts through countries’ experiences. It describes how to read corporations’ financial statements, the similarities and differences between concepts in business accounts and economics, and the necessary adjustments to be made to business accounts to obtain national accounts for economic analysis. Its main target audience is staff responsible for the compilation of national accounts and survey specialists.

Handbook of National Accounting: Use of Macro Accounts in Policy Analysis, 2002, UNSD

The UNSD Handbook of National Accounting: Use of Macro Accounts in Policy Analysis (🔗) is about the interaction between the scope of macro accounting, the compilation of macro accounts, and analysis. Traditionally policy analysts use statistics to monitor developments and make decisions. This handbook emphasizes the role of macro accounting as an instrument rather than a dataset. The term ‘macro accounts’ refers to the feature of macro accounts to reconcile separate statistics into a coherent data set and offers macro accounts as an instrument to policy analysts.

Manual on regional accounts methods, 2013, Eurostat

Regional accounts are a regional specification of the national accounts. They play an important role in the formulation, implementation and evaluation of regional policies. In particular regional indicators resulting from the regional accounts are used for assessing regional disparities.

While Chapter 13 of ESA 2010 contains basic rules for regional accounts, this Eurostat Manual on regional accounts methods (🔗), provides detailed recommendations for their practical implementation in the Member States.

Measuring the Non-observed Economy – a Handbook, OECD, IMF, ILO and CIS Statistics

Complete coverage of economic production is a vital aspect of the quality of the national accounts. This exhaustiveness is hard to achieve because of the difficulties in accounting for certain types of productive activities. Activities that are missing from the basic data used to compile the national accounts because they are underground, illegal, informal, household production for own final use, or due to deficiencies in the basic data collection system are referred to as non-observed. They are said to comprise the non-observed economy (NOE), and including them in the national accounts is referred to as a measurement of the NOE.

Given the wide range of possible approaches to NOE measurement, there is a need to identify and promote international best practice. This is the aim of the Handbook on Measuring the Non-observed Economy – a Handbook, OECD, IMF, ILO and CIS Statistics (🔗). It presents a systematic strategy for achieving exhaustive estimates of gross domestic product consistent with international standards and, in particular, with the 1993 SNA.

10.4.3 Organizational arrangements

Location of national accountants

Given that compilation and management of the NA require very specialized skills and good liaison with key users, the location and training of the national accountants (i.e., those responsible for the national accounts) and their communications with staff in the relevant subject matter areas are vital factors.

In most countries, the unit responsible for the compilation of the national accounts (NA Unit) is contained within the NSO. This is the preferred arrangement as it makes it relatively easy for the NSO to ensure appropriate staff are recruited and trained, that they have easy access to the sources of data input to the NA and that they communicate effectively with the subject matter experts responsible for collecting these data (as further discussed in the next sub-section).

In some countries, the NA Unit is in another producer of statistics within the NSS, often the Central/Reserve Bank, sometimes a research unit within the Ministry of Finance. Whilst this may have the merit of placing the NA Unit close to a major user, it is not a recommended practice.

More specifically, in conformity with UN Statistical Commission decision 51/108c, to comply with the Fundamental Principles of Official Statistics, national accountants should be independent of the users of these statistics such as the monetary authorities.

If the NA Unit is not within the NSO then, in its role as NSS coordinator, the NSO should have a memorandum of understanding (MOU), or equivalent, with the NA Unit. The MOU should cover:

• the data required by the NA Unit from the NSO;

• the training (if any) required by the NA Unit to be delivered by the NSO;

• the national accounting outputs to be produced and disseminated by the NA Unit;

• the schedule and draft agenda for regular and frequent meetings at working level to review the production and transfer of data as agreed and to discuss any forthcoming events or changes in circumstances that might require changes to procedures or lead to improvements in procedures.

• the schedule and draft agenda for regular six-monthly meetings at top management level to ensure that everything is taking place as planned, consider changes proposed at the working level that require top management authorisation, and respond to any concerns raised by top management.

Relationships with subject matter experts

As noted above, and for the following reasons, it is vital that the NA Unit and relevant subject matter experts have highly effective communications.

• First, the subject matter staff determine what data actually become available to the NA Unit for compiling the NA. In this sense, the NA Unit is a particularly important user, perhaps the most important user, for some subject matter areas. In some countries, the NA Unit itself is responsible for some direct data collection. This was more common in the past. It is not recommended because staff in subject matter and service areas are chosen for their skills in conducting surveys, whereas NA staff are not.

• Second, in compiling the accounts, the NA Unit staff have the opportunity to thoroughly assess the various incoming datasets, and their limitations, in terms of coverage, content, accuracy, timeliness, and coherence, and to feedback their observations and recommendations for improvements to the subject matter experts.

Relationships should be built on good communications between subject matter area and NA unit staff, and on common strategies and objectives at the senior management level. Communications can take the form of regular and frequent meetings at working level and regular, but less frequent, meetings at the senior management level. NSO top management should set priorities and stay informed through regular meetings of the chief statistician and immediate deputies with the NA Unit head. This is especially important where the NA Unit and subject matter areas are in different agencies or report to different deputies, as is further discussed in Chapter 6.4.3 — Internal communication and coordination.

10.4.4 Further examples of national practices

Statistics Finland National Accounts

As detailed in ESA 2010 GNI Inventory, Finland (🔗), Statistics Finland compiles the gross domestic product (GDP) and the gross national income (GNI) in Finland in accordance with the European System of Accounts (ESA 2010). The inventory includes only a report for calculating figures at current prices. Constant price (volume, amount) methods are not discussed. It includes the general description of the compilation of National Accounts, calculation methods according to various approaches (output, income, expenditure), account balancing methods, ensuring exhaustiveness of data, and describes the main data sources.

The main data are published on Statistics Finland’s website. Statistical databases contain more detailed data. A press conference is arranged to discuss the first preliminary data. All published data are also available in the Astika time-series database. In addition, statistical data are reported to Eurostat and thus become published in both Eurostat’s and the OECD’s databases.

National Accounts Benchmarking at Statistics South Africa

The outcome of the five-yearly benchmarking and rebasing of South Africa’s national accounts statistics, a project jointly undertaken by Statistics South Africa (Stats SA) and the South African Reserve Bank (SARB), is disseminated in detail in South Africa’s national accounts 1946–2014, An overview of sources and methods Supplement to the South African Reserve Bank, Quarterly Bulletin March 2015 (🔗).

Comprehensive revisions to South Africa’s national accounts statistics are typically undertaken every five years in order to incorporate new or additional information that became available, to reclassify transactions where necessary and to rebase estimates at constant prices. Market developments and the concomitant emergence of new products and services furthermore continually necessitate changes to compilation practices.

In addition to the comprehensive longer-term revision of national accounts aggregates and time-series data, the revision also reflects conceptual, methodological and classification changes following the partial implementation of the latest edition of the System of National Accounts (2008 SNA).

The five-yearly comprehensive revisions differ from the regular annual national accounts’ revisions due to the scope of the changes and the length of the period to which the revisions apply. The most recent set of revisions drew on information from relevant censuses released by Stats SA during the period 2009 to 2014, a number of sectoral surveys and technical reports, and more detailed producer and consumer price information. Most notable were the 2010/11 Income and Expenditure Survey of Households; the results of the Population Census of 2011; the 2010 General Household Survey; various issues of the Annual Financial Statistics (AFS) survey; various issues of the Quarterly Financial Statistics (QFS) survey; the South African National Survey of Research and Experimental Development compiled by the Centre for Science, Technology and Innovation Indicators on behalf of the Department of Science and Technology (DST); technical reports from the Department of Agriculture, Forestry and Fishing; the Abstract of Agricultural Statistics for various years; and information sourced from the Department of Human Settlements.

10.4.5 Further development

The 2008 SNA is continuously reviewed to ensure its relevance for measuring new developments in the economy, as well as new socioeconomic phenomena and dimensions introduced in national and international policy frameworks. This review is undertaken, under the auspices of the UNSC, by the Inter-Secretariat Working Group on National Accounts (ISWGNA) with the support of the Advisory Expert Group (AEG), as further described below.

Inter-Secretariat Working Group on National Accounts (ISWGNA)

The Inter-Secretariat Working Group on National Accounts (ISWGNA) is one of the oldest working groups of the UNSC and comprises five organizations, namely Eurostat, IMF, OECD, UNSD and the UN regional commissions; and the World Bank.

The ISWGNA mandate, provided by the UNSC, is to:

• provide strategic vision, direction and coordination for the methodological development and implementation of the SNA in national, regional and international statistical systems;

• revise and update the SNA and develop supporting normative international statistical standards and other methodological documents on national accounts and supporting statistics;

• promote the development of databases at international, regional and national level on national accounts statistics;

• promote the implementation of the SNA and supporting statistics; and

• promote the use of national accounts and supporting statistics in policy formulation.

Advisory Expert Group (AEG)

The aim of the Advisory Expert Group (AEG) is to assist the ISWGNA in resolving issues on the research agenda (🔗) of the SNA and emerging research issues and to assist the ISWGNA in the review of the SNA implementation programme (🔗). The composition of the AEG reflects the global community representing all regions in the world. It comprises 18 members (🔗), not including the five representatives of the ISWGNA organizations. The period for which a member is invited to serve in the AEG depends on the particular issue that the ISWGNA needs to consider but is at least three years.

The AEG was initially formed in 2002 to assist the ISWGNA with the update of the 1993 SNA (🔗). At its 41st session in 2010, the UNSC re-established the AEG to support the ISWGNA in its work.