challenges related to the implementation of 2008 sna

CHALLENGES RELATED TO THE IMPLEMENTATION OF 2008 SNA

May 2014

Statistics Canada • Statistique Canada2

How has the Canadian economy been performing?

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Real gross domestic product at market prices (chained 2007 dollars)

Nominal gross domestic product at market prices

billions of dollars

Real and nominal gross domestic product

2023-04-19Statistics Canada • Statistique Canada3

What is Canada’s investment as a share of Gross Domestic Product?

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201218%

19%

20%

21%

22%

23%

24%

25%

Investment to GDP ratio


What is Canada’s level of investment in research and development?

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20131.00%

1.10%

1.20%

1.30%

1.40%

1.50%

1.60%

Total R&D Investment to GDP ratio


How open is the Canadian economy?

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 201325%

30%

35%

40%

45%

Export to GDP ratio


How much did the Canadian federal government borrow during the global financial crisis?

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 20120

100

200

300

400

500

600

700

800

Federal general government - Credit market debt outstanding

Other levels general government - Credit market debt outstanding

billions of dollars


How vulnerable is the Canadian household sector?

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 20120

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Loans - liabilities Total currency and deposits - assets

Life insurance and pensions - assets Equity and investment funds - assets

billions of dollars


What do all these things have in common?

All of these measures fall out of the System of National Accounts

The System of National accounts provides the framework under which relevant high quality macroeconomic measures are derived.

The need for national accounts!

Timely, relevant and comprehensive national account information is a significant intellectual asset for any country, and serves four important functions.

• First, it is a framework to measure the economic performance of a country.• Second, international agencies, organizations and businesses (public and

private) increasingly require national account information to inform their opinions regarding a country.

• Third, timely national accounts provide fiscal and monetary policy makers with the information they need to establish the most appropriate fiscal and monetary policies required for economic growth and stability.

• Fourth, national accounts information is a public good allowing citizens to make informed choices in the context of the national economy


The need for national account revisions!

Like any asset the national accounts depreciate with time and new investments need to be made periodically, to ensure that they continue to provide high quality services to their users. Implementing 2008 SNA will improve the relevance of a country’s national accounts information.

This improvement is a challenge for the NSO and does not come without cost.

Government officials, policy makers, academics,

businesses and researchers can help NSOs take on this challenge by using their influence and funding mechanisms to secure the resources required to undertake a revision.



Challenges

National Statistical Organizations will face a number of challenges when implementing a new national accounting standard. These include:

• Determining the scope• Compiling the estimates• Communicating the changes

National account users and government officials can help in addressing each of these challenges.


Determining the Scope

Understanding economic and social information needs• Prior to implementing 2008 SNA the national statistical

organization needs to have a good understanding of the basic economic and social information needs within their respective country.

• National account users, policy makers, researchers and government officials can help by making themselves available to dialogue with national statistical agencies around data needs.



Assessing the availability of data

• The scope of the revision will in-part depend on the availability of data.

• The national accounts compiler should also produce an inventory of existing data holdings as well as develop an inventory of the new sources of information required with implementation of SNA2008. This inventory should be aligned with the priorities identified in the user needs consultation process.



Assessing the availability of data• When data are required for high priority compliance issues the national

statistical organization needs to be creative in how to best secure access to the required information.

• The tendency to implement a large scale survey should not be the norm. Instead, as much as possible, the national statistical agency should leverage existing information collection systems, including private sector providers of information, to secure the necessary data.

• National account users and government officials can help by encouraging data providers (or facilitating the transfer of data from within government) to cooperate with the national statistics office in the development of an integrated national statistical programmes. Tools to encourage such cooperation include legislation, memoranda of understanding, and other data sharing agreements.



On-going resources• While initial investment funds are often secured for the

implementation portion of the project statistical organization are often not allocated on-going funding for the continued production of the estimates. The scope should be determined by the level of on-going resources rather than temporary resources devoted to implementation.

• NSO need resources for the initial investment as well as on-going resources to carry out the production of the updated and expanded national accounts on an permanent basis.


Compiling the estimates

Human Capital• There is a high probability that the team of individuals implementing an

SNA revision is most likely the same team that is responsible for the on-going production of the national accounts estimates.

• If this is the case, the overall project schedule must be integrated with the on-going production schedule of national accounts information.

• Ensuring this type of expertise is one of the most difficult tasks that need to be addressed by a statistical agency. National account users and government officials can help by ensuring that the NSO has access to both national and international training programs and access to experienced academics and government officials.



Back-casting the data• Users of national accounts data like long consistent time series.

There are some very pragmatic reasons for this, including the ease of use in economic modeling. As such, when economic data are subjected to a new set of concepts and methodologies most analysts prefer that these new concepts and methodologies be carried as far backwards as possible.

• This is a major challenge for a statistical organization, with three things to be considered during the implementation phase. Significance of the break Data availability Level of detail



Understanding the new national accounts

• National account users and government officials will need to educate themselves regarding the new national account databases resulting from the 2008 SNA implementation and how these databases relate to data that was previously published.



The need for flexibility• While a great deal of work is necessary to identify which priority issues to

implement and identifying available data sources, even more work is required to determine if the implementation plan can be carried out.

• For example, a country may choose to capitalize research and development, because it has both a user base for the information and available data. However, it is not until they begin to work on the estimates and develop some preliminary series that they will determine the quality of the data and whether or not it can be implemented into the core set of accounts.

• National account users and government officials can help by ensuring they understand that plans may change during the implementation phase and they need to be willing to accept instances where planned changes need to be moved to a later date.


Communication

Getting the message out• The term System of National Accounts is often not well understood!

• National account users and government officials need to engage themselves and understand the significant of the revision in the context of their work.

• NSO can help by speaking in their terms, mentioning the outputs of the system rather than the system itself. It will be much easier to garner the attention of a user if you say that you are going to increase the level of a country’s gross domestic product than if you say you are going to expand the asset boundary to include new intangible assets.


Communication Identifying your users

• A challenge a statistical organization faces when communicating its 2008 SNA implementation plans lies in identifying who this information needs to be communicated to.

• Most statistical organization have vehicles in place to communicate national accounting changes to monetary authorities, various levels of government and large private financial institutions or economic forecasters. However, processes are often lacking and new lines of communication are often needed pertaining to the use and understanding of the information in academia, by journalists, by private enterprises and by the general public.

• National account users and government officials need to identify themselves and dialogue with the NSO on their use of national account data.


Communication Providing lead time

• Finally, users of national accounts information will need substantial lead time to incorporate the new national accounts information.

• Economic models are often built from national accounts information. If the presentation, detail or timing of national accounts information changes, users will need to adapt their forecasting and analytical models.

• Users will need to map the new data into their models as well as devote time to understanding the new data to ensure that they maximize their analytical usefulness.


Communication

Overcoming the perception of error• Another challenge that a statistical agency must overcome when

implementing the 2008 SNA is the perception that the revision is intended to correct an error or errors within their national accounts database.

• While statistical organizations have a large responsibility in developing a comprehensive communication plan surrounding the implementation of 2008 SNA national account users and government officials have a responsibility as well. They will need to engage themselves in understanding what is being communicated and ensure the information is communicated and understood throughout their organization.


Appendix

What is the level of household income and debt in Canada?

25 Statistics Canada • Statistique Canada

0

2

4

6

8

10

12

14

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 20120

20

40

60

80

100

120

140

160

180

Credit market debt to household disposible income (lef t scale) Debt-service ratio (right scale)

percent percent


What is the level of Canadian government debt?

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 20120

20

40

60

80

100

120

General government Federal general government Other levels of general government

percent

General government net debt to GDP

27

Where is investment taking place in Canada and what is it’s share of GDP?

Statistics Canada • Statistique Canada

21.67

20.09

21.02

20.90

20.56

19.44

19.67

23.36

30.24

22.39

31.94

32.66

44.52

Newfoundland and Labrador

Prince Edward Island

Nova Scotia

New Brunswick

Quebec

Ontario

Manitoba

Saskatchewan

Alberta

British Columbia

Yukon

Northwest Territories

Nunavut

0 5 10 15 20 25 30 35 40 45 50

percent

Investment share of GDP, 2000 - 2012

28

Which province in Canada has grown the fastest throughout the 2000s?


-4.38

1.49

-0.11

-1.10

1.46

1.34

2.56

1.92

3.82

1.46

3.15

1.68

1.90



Nova Scotia

New Brunswick

Quebec

Ontario

Manitoba

Saskatchewan

Alberta

British Columbia

Yukon


Nunavut

-5 -4 -3 -2 -1 0 1 2 3 4 5

average annual % change, chained (2007) dollars

Gross domestic product growth, 2000 - 2012

29

Which province in Canada has the highest per capita income?


30.47

26.16

27.07

26.80

26.38

29.78

27.04

31.44

38.90

30.50

42.25

39.90

30.82



Nova Scotia

New Brunswick

Quebec

Ontario

Manitoba

Saskatchewan

Alberta

British Columbia

Yukon


Nunavut

0 10 20 30 40 50

thousands of dollars per person

Per capita household disposable income, 2012


What are Canada’s terms of trade and how does it impact our purchasing power?

1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 20130

20

40

60

80

100

120

Terms of trade Gross domestic income

index (2007=100)


Who is borrowing and who is lending in the Canadian Economy?

1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013-500

-400

-300

-200

-100

0

100

200

300

400

Households Corporations General governments Non-prof it institutions serving households Non-residents

billions of dollars

Net lending / borrowing

32 Statistics Canada • Statistique Canada

How risky is the Canadian household sector portfolio?

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 20120%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

Deposits and f ixed income assets of households Pension and segregated fund assets of householdsEquity and foreign investment assets of households

ratio

challenges related to the implementation of 2008 sna

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