Gross Domestic Product: Non-financial accounts (ESA-2010)
Gross Domestic Product: non-financial national accounts allow estimating various stages of economic process characterised by institutional sectors: production, formation of income, income allocation, their re-allocation and use, as well as accumulation of non-finances.
- Table of contents
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Concepts and definitions
- Data collection and statistical processing
Concepts and definitions
Gross saving
Gross saving is the portion of national disposable income that is not used for final consumption expenditure. Gross (or net) national saving is the sum of the gross (or net) savings of the various institutional sectors.
Gross fixed capital formation
Compensation of employees
Miscellaneous current transfers
Financial corporations
Financial corporations sector consists of institutions that are mainly engaged in financial intermediation and auxiliary financial activities.
Final consumption expenditure
Final consumption expenditure consists of expenditure incurred by resident institutional units on goods or services that are used for the direct satisfaction of individual needs or wants or the collective needs of members of the community.
Final consumption expenditure may take place on the domestic territory or abroad.
Gross domestic product (GDP)
Gross domestic product (GDP) represents the total amount of end products and services produced in the territory of a country within a year. GDP is calculated on the basis of data on domestic production (at current and constant prices), expenditure (at current and constant prices) and income (only at current prices).
GDP from the production approach is calculated as the sum of all value added of all activities producing goods or providing services plus taxes less subsidies on products.
GDP from the expenditure approach consists of all final expenditure made in either consuming the final output of the economy or in adding to wealth plus exports less s imports of goods and services.
GDP from the income approach is calculated as the sum of income earned via production of all goods and services plus taxes on production and imports less subsidies.
GDP revisions in 2020:
GDP revisions in 2019:
Current taxes on income, wealth, etc.
Current taxes on income, wealth, etc. cover all compulsory, unrequited payments, in cash or in kind, levied periodically by general government and by the rest of the world on the income and wealth of institutional units, and some periodic taxes which are assessed neither on the income nor the wealth.
Property income
Output
Gross national disposable income
Gross national disposable income is the sum of the gross disposable incomes of the institutional sectors.
Capital transfers
Capital transfers involve acquisition or disposal of an asset or assets, by at least one of the parties involved in the transaction. Capital transfers can be made in cash or in kind.
A capital transfer in cash consists of the transfer of cash that the first party has raised by disposing of an asset or assets (other than inventories), or that the second party is expected, or required, to use for the acquisition of an asset, or assets (other than inventories). These are capital taxes, investment grants and other capital transfers.
Current international co-operation
Gross operating surplus of the total economy (B.2g)
Gross mixed income of the total economy
Gross entrepreneurial income of the total economy
Net lending (+) or borrowing (–) of the total economy
The net lending (+) or borrowing (–) of the total economy is the sum of the net lending or borrowing of the institutional sectors. It represents the net resources that the total economy makes available to the rest of the world (if it is positive) or receives from the rest of the world (if it is negative).
Net worth of the total economy
Adjustment for the change in the net equity of households in pension funds reserves
The adjustment for the change in the net equity of households in pension funds reserves represents the adjustment needed to make appear in the saving of households the change in the actuarial reserves on which households have a definite claim and which are fed by premiums and contributions recorded as social contributions.
Changes in inventories
Households [GDP: Non-financial accounts]
Private household (household) includes persons living in one dwelling and sharing expenditure or one person having a separate housekeeping.
Sector 'Households' includes individuals or groups of individuals as consumers and, possibly, also as entrepreneurs who produce goods for market and provide non-financial and financial services (market producers).
This sector also includes individuals or groups of individuals as producers of goods and services for own final consumption.
Non-profit institutions serving households
The non-profit institutions serving households consists of non-profit institutions that serve households as separate legal persons and are other private non-market producers.
Their main resources other than those from occasional trade are gained from voluntary contributions in cash or in kind from households as consumers, from general government subsidies or as income from real-estate.
System of National Accounts
Non-life insurance claims
Non-financial corporations
Non-financial National Accounts
Non-financial National Accounts are part of the national accounts system systematically characterising various stages of economic process: production, income generation, income distribution, income redistribution, income use and non-finance accumulation.
Net non-life insurance premiums
Consumption of fixed capital
The rest of the world
Value added [GDP]
Value added is increase of product’s market value, which arises in the result of any kind of economic activity. It is calculated by deducting intermediate consumption from output (at basic prices). The balancing item of the production account is value added.
Exports of goods and services
Imports of goods and services
Taxes of products
Subsidies on products
Subsidies on products are subsidies which are paid for one unit of goods or services produced or imported.
Subsidies on products are usually paid when the good is produced, sold or imported. Subsidies on products are related only to the market output or output for own final consumption.
Taxes on production and imports
Social contributions
Social benefits [GDP]
Social benefits are transfers to households, in cash or in kind, intended to relieve them from the financial burden of a number of risks or needs, made through collectively organised schemes, or outside such schemes by government units and NPISHs; they include payments from general government to producers which individually benefit households and which are made in the context of social risks or needs.
Intermediate consumption
Intermediate consumption covers goods and services consumed ad input during the production process, except for the fixed assets the consumption of which is entered as consumption of fixed capital. In the production process, goods and services can be either transformed or used.
Subsidies [GDP]
Subsidies are current unrequited payments which general government or the Institutions of the European Union make to resident producers, with the objective of influencing their levels of production, their prices or the remuneration of the factors of production.
Current external balance
Current external balance represents the surplus (if it is negative) or the deficit (if it is positive) of the total economy on its current transactions (trade in goods and services, primary incomes, current transfers) with the rest of the world.
Valuables
Data collection and statistical processing
Survey method and data source
Information is obtained from the following data sources:
- Surveys of enterprises and institutions;
- Labour Force Survey;
- Household Budget Survey;
- Data from the Government budget, Ministry of Finance, Treasury, State Revenue Service, Ministry of Agriculture, Latvia State Institute of Agrarian Economics, Bank of Latvia and Financial and Capital Market Commission.
Statistical population
- Enterprise coverage;
- Coverage of institutions financed from the state and local government budget;
- Population coverage – households, labour force.
Calculation method
Gross Domestic Product: Non-financial national accounts are calculated in line with ESA 2010 methodology.
The System of National Accounts is a set of tables presenting resources and expenditure of goods and services by institutional sector, as well as turnover of income from economic activity across the main sectors of the economy and increase or decease in the national wealth.
The System of National Accounts stresses results of economic activity performed by units – enterprises and institutions operating in the respective economic territory.
Unit affiliation to a specific sector is determined by its key activity and functions, which allow judging about economic behaviour, thus the way it generates income and participates in redistribution and expenditure of the income. Each sector is formed by institutional units with similar economic behaviour.
Data in the Latvian system of national accounts are published according to sectors:
- Total economy (S.1):
- Non-Financial Corporations (S.11),
- Financial Corporations (S.12),
- General government (S.13),
- Households (S.14),
- Non-profit institutions serving households – NPISH (S.15),
- Not specified (NS),
- Rest of the world (S.2).
Gross domestic product is one of the most important indicators in the System of National Accounts, as, including all income from economic activity, it characterises efficiency of the economic activity. Efficiency of the used production resources is characterised also by the ratio between value added and resources used for intermediate consumption. Among the national economy sectors the key role in Gross domestic product formation takes the Non-Financial Corporation sector (S 11).
The System of National Accounts starts with the Foreign Trade Account of Goods and Services (V.1), where the volume of foreign trade is presented both - as income and expenditure of the Rest of the world sector (S.2) and as resources and expenditure of goods and services in the Production account. Imports and exports of goods and services have a significant role in the total formation of resources as well as in the expenditure of these resources.
The determining role in the turnover of goods and services plays the national domestic economy.
The amount of goods and services produced within the territory of Latvia is presented in the Production account resources approach (code P.1) by sector of production. By deducting intermediate consumption (P.2) from output of goods and services in the expenditure approach, value added at basic prices is obtained. This evaluation does not include taxes paid upon selling the production or services (value added tax, customs duty, excise duty). As these duties are related to sale of products, not production thereof, they are not distributed between sectors; however, the total of these taxes and duties is presented in sector NS.
Gross domestic product is one of the key indicators in the System of National Accounts, as it includes all income from economic activity, thus characterising efficiency of this activity. Efficiency of the used production resources is also characterised by the ratio between value added and resources used for intermediate consumption.
The next group of accounts, marked as group II in the System of National Accounts, is income accounts. These accounts contain information on the formation of primary income, as well as flow of this income between sectors of the national economy, redirecting it from the sectors they have been generated to sectors where this income belongs, as well as to final consumption sectors.
The first of the income accounts is the Generation of income account (II.1.1). A part of the resources of this account is generated from Production account balance position B.1g – Gross domestic product. In the expenditure approach the primary income from economic activity is presented, of which the entrepreneur pays to residents and government the following: remuneration to employees (D.1), production and import taxes (D.2) less subsidies (D.3), as well as operating surplus at the disposal of the entrepreneur (B.2g) and mixed income generated in the Household sector (B.3g), containing both – remuneration and profit elements.
The following income accounts present income flows that are not closely related to economic activity, but are generated from the lease of property for production or as the result of redistribution of primary income. The most important income types related to property are interest for funds or securities, dividends, withhold of quasi corporation income, rent payments. In the redistribution of property income, also the Rest of the world sector is included, where in the resources approach dividends or interest payments paid to foreign partners are presented and in the expenditure approach—the amounts received. The allocation of primary income account is closed with the balance of payments of primary income (B.5g) also called Gross national income. Unlike Gross domestic product, which presents income generated in the territory of the country, the Gross national income shows operating income belonging to the residents of Latvia. The difference between Gross domestic product and Gross national income is generated from external payments related to the economic activity – remuneration to the employees and property income.
In the System of National Accounts gross labour remuneration is presented as primary income, including also the social tax paid by entrepreneurs. Social tax diversion to the Public administration sector as well as the opposite direction flows – from Public administration sector to Household sector in the form of pensions and subsidies – are presented in the secondary distribution of income account (II.2). This account next to social installments includes also income tax payments, as well as other payments - member fees of public and international organisations, different non-refundable allowances.
The secondary distribution of income account (II.2) is closed with total disposable income (B.6g), which shows income in breakdown by sector, where it is actually spent for final consumption. These resources shall cover consumption needs, as well as formation of the necessary stocks for ensuring further economic activity.
Further distribution of income in the Secondary distribution of income account (II.3) is carried out between Public administration and Household sector. This account shows services generated in the Public administration sector from budget appropriations and are intended for individual consumption. These are mainly services provided by health care, education and cultural establishments. In line with this redistribution also the consumption volumes in the Public administration and Household sector are calculated in two ways: the Use of disposable income account (II.4.1) in line with sector expenditure, and the Use of adjusted disposable income account (II.4.2) - according to the actual consumption. These accounts are closed with Total savings (B.8g), which characterises the volume of funds that can be used for further development of the economic activity.
The next account group is Accumulation (III), formed by the Capital account (III.1) and the Financial account (III.2). The resources approach of the Capital account includes savings accumulated as result of economic activity (B.8g), as well as different payments across sectors, related to accumulation of savings, for example, budget subsidies for investments, the Public administration sector pays to non-financial enterprises. The summary of resources approach of the capital account (B.10.1) characterises increase in funds at disposal of each sector, achieved as result of economic activity. The expenditure approach of the capital account shows the growth of the value of fixed assets as result of purchase or decrease thereof due to liquidation, as well as changes to stocks.
The Capital account is closed with balance position (B.9) which can also be considered as financial savings, as these are resources that are directed for credits or, should a need be, attracted in the form of a loan. In the event balance position B.9 is a positive number it means that this sector has lent its financial funds to other sectors and vice versa – a negative number means the debt has grown.
Data revision
In line with the CSB Revision Policy Guidelines the published data are revised after annual balancing of the System of National Accounts.
Classifications
Data are acquired, calculated and classified, using the following classifications:
- Classification of the Administrative Territories and Territorial Units of the Republic of Latvia (CATTU) (28.12.2010 edition);
- Statistical Classification of Economic Activities in the European Communities (NACE Rev. 2);
- Statistical Classification of Individual Consumption (COICOP);
- Classification of the Purposes of Non-Profit Institutions Serving Households (COPNI);
- Classification of Budget Expenditure by Economic Category;
- Classification of Budget Revenue;
- Classification of Institutional Units;
- Classification of the Functions of Government (COFOG).
Contact person on methodology
Anita Ernestsone
Quarterly National Accounts Section
Senior Officer