Download rebasing national accounts estimates

REBASING NATIONAL ACCOUNTS
ESTIMATES
Background of Rebasing and Comparison of key
Macro- Economic indicators in old and new series
Department of Census & Statistics
Ministry of Policy Panning, Economic Affairs, Child, Youth
and Cultural Affairs
1
Table of Content
Comparison of key Macro- Economic indicators completed under old and new series base years ............ 4
Executive Summery .................................................................................................................................. 4
Background ............................................................................................................................................... 4
What is Gross Domestic Product (GDP) and economic growth rate? ...................................................... 4
How is the GDP computed? ...................................................................................................................... 4
Production approach ............................................................................................................................ 4
Expenditure approach .......................................................................................................................... 4
Income approach .................................................................................................................................. 5
Why the base year is needed?.................................................................................................................. 5
Why does GDP need to be rebased? ........................................................................................................ 5
What are the benefits of rebasing GDP .................................................................................................... 5
What are the implications of GDP rebasing ............................................................................................. 6
Why is year of 2010 used as the new base year? ..................................................................................... 6
Methodology of the exercise .................................................................................................................... 6
Data sources ............................................................................................................................................. 7
Main steps of rebasing process ................................................................................................................ 8
Statistics released under the new series .................................................................................................. 8
Revision Policy .......................................................................................................................................... 8
Documents available on rebasing............................................................................................................. 9
Stakeholder involvement in providing source data.................................................................................. 9
External validation of rebased estimates ................................................................................................. 9
The way forward ....................................................................................................................................... 9
Economic activities in the two series ....................................................................................................... 9
Agricultural activities ................................................................................................................................ 9
Industrial activities.................................................................................................................................. 10
Services activities .................................................................................................................................... 10
Comparison of first quarter 2015 estimates in the two series ................................................................... 12
Changes in the level of GDP.................................................................................................................... 12
Effect of Revised Series in the growth rates of GDP............................................................................... 12
Structure of Sri Lankan economy ........................................................................................................... 12
Contribution to the GDP growth rate ..................................................................................................... 13
GDP Implicit Price Deflator ..................................................................................................................... 14
Comparison of Annual estimates in the two series .................................................................................... 14
Changes in the level of GDP.................................................................................................................... 14
Effect of Revised Series in the annual growth rates of GDP ................................................................... 15
Structural composition of Economy ....................................................................................................... 16
Implications on sectors in Sri Lankan economy...................................................................................... 17
Effect of Revised Series in the Per-capita GDP (Per-Capita income) ...................................................... 18
Effect of Revised Series in the Budget Deficit......................................................................................... 19
Effect of Revised Series in the GDP implicit price index/ GDP deflator.................................................. 20
Effect of Revised Series in the Tax ratio ................................................................................................. 20
3
Comparison of key Macro- Economic indicators completed under old and new
series base years
Department of Census and Statistics (DCS),
Ministry of policy Planning, Economic Affairs,
Child, Youth and Cultural Affairs has released the
new series of National Accounts preliminary
estimates revising the base year from 2002 to
2010 along with the estimates for the first quarter
2015.
Lanka. In the year 2007, following international
Executive Summery
The GDP is the market value of final goods and
services produced within a country in a given
period of time. It covers all productive economic
activities that provide goods and services for the
consumption of different users of an economy.
GDP is a tool that can be used to measure the size
of an economy.
Compiling National Accounts estimates of a
country is crucial, because the primary objective
of preparing national accounts estimates is using
those for policy planning. Therefore, those
estimates should be accurate as much as possible.
The base year that used to derive constant price
estimates, should be revised to represent the real
economic situation of a country. Department of
Census & Statistics (DCS) as the National Statistics
Office (NSO) has completed this tedious task and
the preliminary estimates have been released.
This note describes, background and rationale of
rebasing
national
accounts
estimates,
methodologies used and annual and quarterly
results. the salient feature of the new series is the
uplift of the level of Gross Domestic Product (GDP)
by 14.4 percent for the year 2010 (new base year).
The structure of Sri Lankan economy has also
been changed significantly. There as a tradeoff
between contribution of agricultural and industrial
activities to the total GDP for almost all years from
the new base year. In the new series contribution
of agricultural activities to the GDP is lower than
that of old series.
Background
Until the year 2007, National accounts estimates
were prepared by both DCS and Central Bank of Sri
4
practice only DCS has been authorized to prepare
national accounts estimates for Sri Lanka.
What is Gross Domestic Product
(GDP) and economic growth rate?
Economic growth is the percentage change of real
GDP and this measures the quantitative expansion
of an economy. Real GDP is derived by removing
price effect from GDP at current prices.
How is the GDP computed?
There are three approaches.
Production approach
Total value added generated by resident
units by engaging economic activities plus
net taxes on products
Expenditure approach
The consumption expenditure of different
economic agents in an economy on
produced goods and services. Private Final
Consumption Expenditure (PFCE) of
Household and NPISH, Government Final
Consumption Expenditure (GFCE) of
General Government, Gross Capital
Formation (GCF) of Corporations and
Exports are the demand components of
an economy.
Income approach
national accounts is recommended to changed
periodically to take into account all above changes
This measures the income earned by
various economic agents for the supply of
factors of production and other resources
in an economy such as Compensation of
Employees (CE), Consumption of Fixed
Capital (CFC), Gross Operating Surplus
(OS) and net taxes on production.
Why the base year is needed?
o
Lankan economy. Therefore, The base year of the
which has taken place in the economy and to
depict a true picture of the economy through
macro aggregates like Gross Domestic Product. It is
in line with the United Nations recommendation on
2008 SNA which is the manual on compilation of
National Accounts and is used all over the world.
What are the benefits of rebasing GDP
For examining the performance of the
economy in real terms through the
macroeconomic aggregates like Gross
Domestic Product (GDP) is prepared at the
prices of selected year known as base year.
The estimates at the prevailing prices of
the current year are termed as “at current
prices”, while those prepared at base year
prices are termed “at constant prices”. The
comparison of the estimates at constant
prices, which means “in real terms”, over
the years gives the measure of real growth.
The rebasing of national accounts provides a wide
range of benefits and a few of are presented as
follows.
To adopt recommendations of SNA 2008
which has been jointly prepared by the
United Nations, World Bank, International
Monetary Fund, Organisation for Economic
Cooperation and Development and the
European Union
To describe the real size and rate of
movement of the economy during a given
period of time
Why does GDP need to be rebased?
The base year of existing real GDP is 2002 and that
is out dated and historical. Therefore economic
growth rate or percentage change of real GDP (GDP
at constant prices) in the 2002 series may not show
the real movement and real size of Sri Lankan
economy. Because, Over the past decade, many
changes
in
the
structure
of
production,
consumption and prices have occurred in the Sri
5
To improve the quality, accuracy and
reliability of estimates
To improve the international comparability
of the GDP
To
adopt
recommended
other
internationally
improvement
to
national accounts compilation system
the
What are the implications of GDP
rebasing
Adoption of International Standard of
The rebasing of GDP brings some impacts on
Adoption of Central Product Classification
macro-economic indicators such as,
(CPC version 2)
Industry Classification (ISIC version 4)
Increase in nominal GDP, which will lead to
Adoption of sector classification
increase in per-capita income
Development of a Supply and Use Table
Change the production structure
framework
Changing the macroeconomic indicators
Use of much accurate and recent source
such as budget deficit, investment rate,
data
savings rate, tax rate and etc
The SNA is the internationally agreed standard set
Change in the growth rates that are
of recommendations on how to compile measures
published in the old series
of economic activity. The ISIC is the internationally
accepted tool in identifying economic activities. Its
Why is year of 2010 used as the new
base year?
main purpose is to provide a set of activity
categories that can be used for the collection and
International recommendation is to select a much
recent and stable year in main economic
indicators such as money supply, interest rates
and price indices as the base year. Following the
recommendation, in depth analysis was
undertaken of time series of main economic
indicators and assistance were taken from
national accounts experts of International
Monetary Fund (IMF) for the selection of new
base year.
representing of statistics relevant to economic
Methodology of the exercise
In order to make the accounts more meaningful
The rebasing exercise was conducted in line with
internationally
recognized
methodology
procedures and recommendations. Six major
methodological pillars were used to enhance the
National accounts compilation framework.
Adoption of the System of National
Accounts (SNA 2008 version)
6
activities. The CPC is the classification based on the
physical characteristics of goods or on the nature
on services rendered. Each types of good or service
distinguished in the CPC in such a way that is
usually produced by only one activity as defined by
the ISIC. The CPC covers products that are output of
economic activities.
and to provide certain analyses, the units making
up the economy are grouped into a number of
institutional sectors based on their kinds of
activities and who owns and controls them.
Institutional sectors can be considered as the actors
of an economy and those sectors are Financial
Corporations (FC), Non-Financial Corporations
(NFC), Households (HH), General Government (GG),
Non Profit Institutions Serving Households (NPISH)
Use of Labour Input Method (LIM) in
and Rest of the World (RoW). In the new series
calculation of output and Value Added of
Gross Output, Intermediate Consumption (IC),
economic activities for which that source
Gross Value Added (GVA) are recorded separately
data are not readily available to estimate
according to the sectors. It will provide a facility to
Gross Value of Output, Intermediate
measure the contribution of each sector to
Consumption and Gross Value Added
economic activities and this is very important for
Adoption of sector classification.
policy
making.
Hence,
adopting
a
sector
classification is a turning point of Sri Lankan system
Data sources
of national accounts.
In addition to expanding the coverage of economic
Supply and Use table or SUT is a framework that
activities during the rebasing exercise, another
balances the supply and use for all products and
major initiative undertaken was the inclusion of
services in an economy. Supply table illustrates the
new
supply of goods and services produced by domestic
administrative data sources, complimented by
industries and import from rest of the world. The
survey data for selected economic activities. It
use table shows the use of goods and services in
should be stated here that the rebasing exercise
economic activity and final consumption including
provided an opportunity for the DCS to engage
value added generated in the production process.
more directly and more intensively with key
One of the main advantages of SUT framework is
stakeholder agencies of the national statistical
ability to derive GDP by using three approaches
system. Particularly, Ministry of Finance, Central
namely production, expenditure and income
Bank of Sri Lanka, Insurance Board of Sri
without
Lanka(IBSL), Department of Inland Revenue (DIR),
any
discrepancies.
The
important
procedural changes made in the new series are
sources.
These
were
largely
Ceylon Electricity Board (CEB), National Water
Incorporation of data on production
Supply and Drainage Board and Ceylon Petroleum
activities undertaken by the household;
Corporation (CPC) and etc.
Measurement of output of some crops, live
The new series incorporates the latest available
animals and construction by using work in
results of surveys, and administrative data bases
progress method;
such as;
Adoption
of
Intermediatary
7
data
FISIM
(Financial
Annual Survey of Industries (ASI),
Services
Indirectly
Labour Force Survey (LFS),
Measured) method in calculation of output
Household Income and Expenditure Survey
of financial related activities;
(HIES)
Cost of production surveys,
Organize awareness meeting for users and
Population and Housing Census 2011
stakeholder agencies
Value Added Tax (VAT) data base of
Organize results validation meeting with
Department of Inland Revenue (DIR),
key policy makers
Trade statistics from Sri Lanka Customs,
Result validation technical mission with
Balance of Payment statistics (BOP) from
International Monetary Fund
Central Bank of Sri Lanka
Compilation of Merchandise imports and
Business statistics of various institutions
exports, wholesale and retail trade margins
as well as imports and exports of services
Main steps of rebasing process
Preparation of Supply and Use Table (SUT)
The preparatory work for the rebasing exercise
commenced in 2011. Since then several activities
have been undertaken including;
Train the staff locally and internationally,
Preliminary estimates of GDP at current and
constant prices for quarterly and annually from
2010 to first quarter 2015 has been released
herewith. Different estimates for same economic
indicators for the same period can be seen in
these two series due to above mentioned
improvements. Therefore, Gross Domestic
Product (GDP) and the economic growth in the
new series, theoretically represent the real size
and real rate of movement in Sri Lankan economy.
trainings
Revision Policy
Revision of the activity classification in
national accounts
Finding source data for activities that are
newly identified to be included to the
production boundary
Conduct Ad-hoc surveys and studies on
selected economic activities
and
international
technical
missions
of
such
as
organizations
International Monetary Fund (IMF) and
Asian Development Bank (ADB)
Meeting
stakeholders
for
obtaining
accurate and reliable data
Collection of price indices
Calculation of price and volume indices
that are used to derive constant price
estimates
Preparation of production account
8
Statistics released under the new
series
Revisions are an essential part of good quarterly
national accounts (QNA) compilation practice
because it allows to improve national accounts
estimates using most accurate, recent data to the
maximum extent possible. Resource constraints,
in combination with user needs, cause tension
between the timeliness for publishing data on the
one hand and reliability, accuracy, and
comprehensiveness on the other hand. To reduce
this tension, typically, preliminary data are
compiled initially and later are revised when
accurate and reliable data become available. Good
management of the process of revisions requires
the existence of a well-established and
transparent revision policy. Therefore, quarterly
and annual national accounts estimates of Sri
Lanka in the new series will be revised when much
accurate data become available by using well
designed revision policy. History of revisions of
key economic indicators such as economic growth
rate will be presented by a revision triangle and
will be available on the DCS web for the
convenience of users shortly.
External validation of rebased
estimates
Documents available on rebasing
This release is preliminary and a few refinements
are being undertaken, including a more extensive
use of the Supply and Use Table (SUT) framework.
DCS plans to release the revised estimates of the
nominal and real GDP along with the expenditure
and income estimates end of August 2015.
Balanced Supply and Use Table (SUT) will also be
published along with above estimates. DCS
successfully completed the first Economic Census
in the Sri Lankan census history considering 2013
as the reference year. Results of this census will
be available by the end of 2015 and data will
represent the most accurate size and structure of
Sri Lankan economy. Therefore DCS is planning to
change the base year again from 2010 to 2013.
A brochure that describes the rebasing process and
all other improvements made to the Sri Lankan
System of National Accounts is already available on
DCS web site. Frequently asked questions with
answers will be available shortly.
Stakeholder involvement in
providing source data
The rebasing exercise involved a consultative and
participatory process that involved various data
producers, data suppliers and data users.
Specifically, several government Ministries,
Departments and Agencies provided sectoral data
to facilitate the computation of the GDP
estimates. Among these institutions Ministry of
Finance, Central Bank of Sri Lanka, Department of
Inland Revenue (DIR), Sri Lanka Customs, Board of
Investment (BOI), Ceylon Petroleum Corporation
(CPC), Sri Lanka Railway, National Jem & Jewelry
Authority, Sri Lanka transport Board, Insurance
Board of Sri Lanka (IBSL), Ceylon Electricity Board
(CEB), Water Supply and Drainage Board and Sri
Lanka Tourism Development Authority are the key
agencies. In addition, stakeholder workshops were
organized to elicit information and also validate
the output of the exercise.
9
Apart from internal validation, the International
Monetary Fund (IMF), and the Asian Development
Bank (ADB) were involved in the validation
processes through workshops and technical
missions.
The way forward
Economic activities in the two series
Economic activities in the existing series are
identified by using International Standard of
Industry Classification (ISIC) revision 3. In the new
series this is done according to International
Standard of Industry Classification revision 04. In
the new series, Gross Domestic Product is
disseminated in two ways: one is with 48
economic activities. Second one with 10
categories.
Agricultural activities
Agricultural activities are classified by ISIC
Revision 4. In the new series “Plant
propagation” and Agricultural supporting
activities” that were out of production
boundary in the old series are successfully
covered. Dissemination categories are
decided by considering the production
pattern and importance of each crop in Sri
Lankan economy.
except insurance and Pension funding and
auxiliary activities” and “Insurance and
Pension funding activities”. In the old
series, all Banking, Insurance and Real
estate activities were grouped in one single
activity. In the new series Real estate” is
classified as a separate activity and not
regarded as a financial activity. Health and
Education services Gross output and Gross
Value Added are calculated and
disseminated separately as those are
crucial in Sri Lankan economy.
Industrial activities
Manufacturing industry is identified in
most disaggregated level so that enhance
the user convenience. Sewerage and waste
collection is included in to the production
boundary which is completely ignored in
the old series.
Activities in the two series are presented in Table
01 and 02.
Services activities
Financial activities are classified in to main
two activities namely, “Financial services
Table 1: Economic activities in old series
No
10
Old series
No
1
Tea
21
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Rubber
Coconut
Minor export crops
Paddy
Livestock
Highland crops
Vegetables
Fruits
Plantation Development
Firewood & Forestry
Other Agricultural Crops
Inland - Fishing
Marine - Fishing
Gem Mining
Other Mining
Processing (Tea, Rubber and Coconut)
Food Beverages
Textile, Wearing apparel & leather
Chemicals, petroleum, Coal, rubber & plastic
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
Old series
Non-Metallic Mineral products except products of
Petroleum & Coal
Fabricated metal Products, Machinery & equipment
Other Industries
Cottage industry
Electricity
Gas
Water
Construction
Import trade
Export trade
Domestic trade
Hotels and restaurants
Transport- Railway
Transport- Passenger and Goods
Cargo handling-Ports and Civil aviation
Post and telecommunication
Banking, insurance and real estate etc.
Ownership of dwellings
Government services
Private services
Table 2: Economic activities in New series
No
New series
No
New series
1
Growing of Cereals (except rice)
25
Manufacture of other non- metallic mineral products
2
Growing of Rice
26
Manufacture of basic metals and fabricated metal products
3
Growing of Vegetables
27
Manufacture of machinery and equipment i.e..
4
Growing of Sugar cane, tobacco and other non-perennial
crops
28
Manufacture of furniture
5
Growing of fruits
29
Other manufacturing, and Repair and installation of
machinery and equipment
6
Growing of Oleaginous Fruits (Coconut, king coconut, Oil
palm)
30
Electricity, gas, steam and air conditioning supply
7
Growing of Tea (Green leaves)
31
Water collection, treatment and supply
8
Growing of other beverage crops (Coffee, Cocoa etc..)
32
Sewerage, Waste, treatment and disposal activities
9
Growing of spices, aromatic, drug and pharmaceutical
crops
33
Construction
10
Growing of rubber
34
Wholesale and retail trade
11
Growing of other perennial crops
35
Transportation of goods and passengers including
Warehousing
12
Animal Production
36
Postal and courier activities
13
Plant propagation and agricultural supporting activities
37
Accommodation, Food and beverage service activities
14
Forestry and Logging
38
Programming and broadcasting activities and audio video
productions
15
Marine fishing and Marine Aquaculture
39
Telecommunication
16
Fresh water fishing and Fresh water Aquaculture
40
IT programming consultancy and related activities
17
Mining and quarrying
41
Financial Service activities and auxiliary financial services
18
Manufacture of food, beverages & Tobacco products
42
Insurance, reinsurance and pension funding
19
Manufacture of textiles, wearing apparel and leather
related products
43
Real estate activities, Including Ownership of dwelling
20
Manufacture of wood and of products of wood and cork,
except furniture
44
Professional services
21
Manufacture of paper products, printing and reproduction
of media products
45
Public administration and defense; compulsory social
security
22
Manufacture of coke and refined petroleum products
46
Education
23
Manufacture of chemical products and basic
pharmaceutical products
47
Human health activities, Residential care and social work
activities
24
Manufacture of rubber and plastic products
48
Other personal service activities
11
Comparison of first quarter 2015 estimates in the two series
In the new and the old series, Gross Domestic
Product (GDP), economic growth rate, structure of
the economy, contribution of different activities
to the overall growth, GDP deflator represent
considerable differences and all these differences
are due to adopted improvements to the Sri
Lankan system of national accounts in the
rebasing process.
Changes in the level of GDP
A level change of GDP at current prices is a
common experience after the rebasing. This
happens due to widening the coverage, inclusion of
much accurate data and methodological changes.
The GDP that measures the size of Sri Lankan
economy in the new series stood at 2,740,980 Rs
Figure 01 clearly illustrates the changes in the
levels of GDP due to the introduction of the new
series of national accounts in Sri Lanka.
Effect of Revised Series in the growth
rates of GDP
Economic growth rate or percentage change of
GDP at constant prices for the first quarter of
2015 recorded as 6.0 percent compared with the
same quarter of the previous year in the new
series. In the old series it has recorded as 6.4
percent. Growth rates of the two series are
compared Table 03.
Table 3: Comparison of growth rates of two
series
Comparison of Growth rates of the two series- First
Quarter (%)
Mn level in the first quarter of 2015 while the same
recorded 2,607,045 Rs Mn in the old series.
Accordingly, the size of Sri Lankan economy is
expanded
by
5.1
percent
due
to
above
2011
2012
2013
2014
2015
New series
9.8
16.1
3.6
0.7
6.0
Old Series
8.0
8.0
6.1
7.6
6.4
improvements.
Figure 1: Gross Domestic Product at current
prices in the two series
Structure of Sri Lankan economy
In the old series, agricultural, industrial and
services activities contributed 13.3 Percent, 32.6
percent and 54.1 percent to the GDP at current
prices for the first quarter of 2015. The
contribution of agricultural and industrial activities
decreased to 7.8 percent and 28.7 Percent
respectively and for services activities increased
up to 56.5 percent in the new series representing
the trend towards services dominant economy.
The contribution of Agricultural activities in the
12
GDP in the old and new series for the first quarter
2015 is presented in Figure 02.
Figure 2: Contribution of major activities to the
Gross Domestic Product
percent and 65.4 percent respectively. But in the
new series, industrial activities contributed
negatively to the overall growth rate In the first
quarter of 2015. Due to changes of valuation
method in the rebasing the summation of Value
Added of main three activities is not equal to the
GDP. Taxes less subsidies on products need to be
added to the Gross Value Added to calculate Gross
Domestic Product. Therefore, contribution of
Taxes less Subsidies on products to the overall
growth is also possible to calculate. Contributions
of major economic activities and Taxes less
Subsidies on products to the overall growth rate
are presented in Figure 03.
Contribution to the GDP growth rate
Under the old series Agricultural, Industrial and
Services activities contributes to the overall
growth rate of 6.4 percent 1.3 percent, 33.3
Figure 3: Contribution to overall GDP growth rate
Contribution to overal GDP growth rate-First Quarter
2015
%
100%
80%
60%
40%
20%
0%
-20%
Old series
Taxes less Subsidies on
products
13
New series
9.2
Services
65.5
96.8
Industry
33.2
-9.7
Agriculture
1.3
3.7
GDP Implicit Price Deflator
The ratio of current and constant GDP represents the overall price level of an economy and can be used
inflation for a specific period. Under the new series, inflation or percentage change of GDP implicit Price
Deflator for the last two quarters recorded lower rates than in the old series. Figure 04 Clearly compare
the percentage changes of GDP deflators for the first quarters from 2010.
Figure 4: Change of GDP Implicit Price Deflator
Comparison of Annual estimates in the two series
Changes in the level of GDP
The level of annual GDP in the new series is significantly higher than the old series. For the new base
year (2010), the level or the size of Sri Lankan economy increased by 14.4 per cent in the new series.
Table 4: Gross Domestic Product at Current prices from 2010 to 2014
Year
2010
2011
2012
2013
2014
14
Gross Domestic Product (GDP) at current prices
Old series (Rs.Mn)
New series (Rs.Mn)
Percentage increase
5,604,104
6,413,668
14.4
6,543,313
7,219,106
10.3
7,578,554
8,732,463
15.2
8,674,230
9,592,125
10.6
9,784,672
10,291,581
5.2
Figure 5: Gross Domestic Product at current prices
Effect of Revised Series in the annual growth rates of GDP
Even though the level of GDP is higher for all the years in the new series, growth rates of the two series
showed an irregular pattern. Growth rates for the years 2013 and 2014 are lower than in the old series
while for 2011 and 2012 recorded higher growth rates with respect of the old series. Use of much
appropriate price and volume indices to derive constant value added in the rebasing is one of significant
reasons for these lower growth rates.
Table 05: Growth Rates of Gross Domestic Product
Comparison of Annual Growth Rates of two series (%)
Year
Old Series
New series
2011
8.2
8.4
2012
6.3
9.1
2013
7.2
3.4
2014
7.4
4.5
15
Structural composition of Economy
Structure of Sri Lankan economy has changed after the rebasing due to revision of the reference year
and other improvements made to the system in the rebasing process. Most significant implication is the
reduction of the contribution1 of agricultural activities to the total GDP from 2010.
Figure 6: Contributions of Main activities to GDP in 2010
Having a look at the contributions of major economic activities to the GDP from 2010 to 2014 in old and
new series may lead to understand the diversification of Sri Lankan economy.
Figure 7: Contribution of Agriculture to the Annual GDP
%
14.0
Contribution of Agriculture to the Annual GDP
12.0
10.0
8.0
6.0
4.0
2.0
0.0
2010
2011
New series
1
2012
2013
2014
Old series
In old series value added of activities consists both Value Added and relevant taxes less subsidies on products. In
the new series, Taxes less subsidies on products calculated separately. Therefore, shares of two series cannot be
compared directly.
16
Figure 02: Contribution of Industry to the Annual GDP
%
40.0
Contribution of industry to the Annual GDP
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
2010
2011
New series
2012
2013
2014
Old series
Figure 09: Contribution of Services to the Annual GDP
Contribution of Services to the Annual GDP
%
59.0
58.0
57.0
56.0
55.0
54.0
53.0
52.0
2010
2011
New series
2012
2013
2014
Old series
Implications on sectors in Sri Lankan economy
As discussed before, adoption of sector classification is one of the major improvements added to the
system of national accounts when the base year is changed. Therefore, contributions of each sector to
economic activities can be assessed in the new system and these implications are much important in
policy making. Sector accounts are published in annual basis, from 2010 and onwards, for the
convenience of policy makers and researches. Some of the implications regarding sectors in the new
series are presented in table 06 and 07.
17
Table 06: Contribution to different sectors to the economy
Contribution of sectors to the economy
Year
NFC
2010
2011
2012
2013
2014
FC
35
34.9
36.1
35.7
34.8
GG
5.8
4.2
4.3
4.2
4.2
9.9
10
8.7
9
9.5
HH
49.3
50.9
50.9
51.1
51.5
The striking feature table 06 explains is “the biggest contributor to the total economy is household
sector”. Its contribution is 49.3 percent. Non financial corporation (NFC), Financial Corporation (FC), and
General Government (GG) sectors responsible for 35 percent, 5.8 percent 9.9 percent of total GDP.
These ratios remained unchained throughout the years.
Table 07 explains a different story on Sectors in Sri Lankan economy. According to the table, Financial
Corporation (FC) sector engage only services activities while Non-Financial Corporation (NFC) and
Household (HH) sectors engage all agricultural, Industrial and Services activities. General Government
(GG) largely engage Services activities including “Public administration”, “Health” and “Education”.
Table 07: Contribution of different sectors to main activities in 2010
Contribution of sectors to main activities in 2010
NFC
Agriculture
Industry
Services
Total
FC
4.8
53.6
41.5
99.9
GG
100
100
0
3.9
96.1
100
HH
15.8
21.3
62.9
100
Total economy
9.5
29.7
60.9
Effect of Revised Series in the Per-capita GDP (Per-Capita income)
The per-capita income in current terms is estimated at 2984 US $ for 2010 in the new series as against
2400 US $ for the same year in the old series registering 24.3 percent increase. Even thought this is
significant increase, Sri Lanka is still in low middle income country in the World Bank income
classification. It is still below Annual Per-capita income from 2010 to 2014 are presented in table 08.
18
Table 08: Percapita Gross Domestic Product in two series
Per-Capita GDP
Indicator
Gross Domestic Product (Old series)
Gross Domestic Product (New series)
Mid year population(Million)
Percapita GDP (Old series-Rs)
Percapita GDP(New series-Rs)
Exchange Rate
Percapita GDP(Old series- US $)
Percapita GDP(New series-US $)
2,010
2011
2,012
2013
2,014
5,604,104
6,543,313
7,578,554
8,674,230
9,784,672
6,413,668
7,219,106
8,732,463
9,592,125
10,291,581
20.03219
20.21505
20.42400
20.57900
20.77100
279,755
323,685
371,061
421,509
471,074
320,168
357,115
427,559
466,112
495,478
113
111
128
127
131
2,474
2,927
2,908
3,316
3,608
2,832
3,230
3,351
3,667
3,795
Figure 3: Percapita Gross Domestic
Effect of Revised Series in the Budget Deficit
Budget deficit represents the difference between estimated government Revenue and the expenditure
as a percentage of Gross Domestic Product, decreased slightly for all the years from 2010 due to
increase of Gross Domestic Product at current prices. Comparison of this indicator between two series is
presented in Figure 11.
19
Figure 4: Budget Deficit as a percentage of GDP
Effect of Revised Series in the GDP implicit price index/ GDP deflator
GDP deflator, the ratio between GDP at current prices and constant prices represented as an index and
that can be used to measure the changes of price level (Inflation) of overall economy for the years from
2010 to 2014 has considerably changed due to revised price and volume indices used to derive constant
price estimates. In this process, the 2002 outdated price structure was taken to the much recent year of
2010. Therefore, accuracy of estimates of GDP deflator is increased in the new series and the
comparison is presented in Figure 12.
Figure 5: Percentage change of GDP Implicit Price Deflator
Effect of Revised Series in the Tax ratio
Government tax revenue as a percentage of GDP at current prices which represents government effort
to tax collection has reduced from 12.93 to 10.72 due to increase the level of GDP at current prices in
2010. Annual tax ratio from 2010 to 2014 are presented in table 09.
20
Table 09: Tax Revenue
Tax Revenue
Indicator
2011
2012
724,747
812,611
908,913
1,005,895
1,050,362
5,604,104
6,543,313
7,578,554
8,674,230
9,784,672
6,413,668
7,219,106
8,732,463
9,592,125
10,291,581
Tax ratio (Old series)
12.93
12.42
11.99
11.60
10.73
Tax ratio (New series)
11.30
11.26
10.41
10.49
10.21
Tax Income (Rs Mn)
Gross Domestic Product
(Old series Rs Mn)
Gross Domestic Product
(New series-Rs Mn)
21
2010
2013
2014