National Accounts - Annual and quarterly

0. Registration entry for subjects

0.1 Name

National Accounts - Annual and quarterly

0.2 Subject area

National accounts

0.3 Responsible authority; office, division, person etc.

Guðrún Ragnheiður Jónsdóttir
Statistics Iceland
National Accounts and Public Finance Department
telephone: +354 528 1121

0.4 Purpose and history

The purpose of national accounts is to present, within a comprehensive accounting framework, data about the economy as a whole and for individual sectors. National accounts are not an accounting system where every transaction is recorded, however, the focus is on few core concepts e.g.: Gross Domestic Product (GDP), Household final consumption expenditure, Government final consumption expenditure, Gross fixed capital formation, Balance of payment (BOP), Compensation of employees and Operating surplus of enterprises.

Official Icelandic national accounts figures stretch back to 1945. Furthermore, through the years few historians have worked on historical national accounts with figures that date back to 1870. Since 2000 quarterly national accounts have also been compiled and from the first quarter of 2006 seasonal adjustments have been developed. Both series are available back to 1997, first quarter.

Since 2000, the national accounts have been in accordance with the definitions of the European System of National Accounts, ESA95. Consistent time series in line with the new definitions go back to 1990. Before that time Icelandic national accounts were compiled according to the United Nations SNA 68.

0.5 Users and application

National accounts are used for short or long term economic analysis. Like company accounts the national accounts enable analysts to examine the economic performance of previous years, over a decade or the past quarter. They are the base that economic models and forecasts are built on, either for the economy as a whole or individual sectors. The Ministry of Finance, the Prime Minister's Office and the Central Bank use national accounts for forecasting and in preparations of the budget. The financial sector, labour and business organizations and individual enterprises use national accounts to follow up on economic performances. International organizations like UN, OECD and EU use national accounts to compare the economic development of different nations and figures from the accounts are also used to calculate the contributions of individual countries to these international organizations.

0.6 Sources

A wide variety of sources are used for the compilation of the national accounts. Among the most important sources are:
  • External trade
  • Balance of payments
  • Financial accounts of enterprises and institutions
  • Pay-as-you-earn Register
  • Personal income tax returns
  • The financial accounts of central and local governments
  • Production statistic
  • VAT Register
  • Information from the Land Registry of Iceland
  • Household expenditure survey
  • Consumer price index and Building cost index
  • Wage index

0.7 Legal basis for official statistics

See Act no. 163/2007 regarding Statistics Iceland.

0.8 Response burden

Mostly, the national accounts are based on register information and other data that is collected for other purposes. In exceptional cases data is requested directly from companies, however never from individuals. In general the data that is requested directly from companies are information they already have available. Response burden is therefore kept at minimal.

0.9 EEA and EU obligations

Council Regulation (EC) No 2223/96 of 25 June 1996 stipulates that the national accounts in EU and EEA are compiled in accordance with the definitions in the EU's "European System of National Accounts ESA95", which is a European version of the UN's "A System of National Accounts 1993". ESA95 was adopted in Iceland in 2000.

Commission Regulation (EC) No 1889/2002 of 23 October 2002 on the implementation of Council Regulation (EC) No 48/98 completing and amending Regulation (EC) No 2223/96 with respect to the allocation of financial intermediation services indirectly measured (FISIM) within the European System of national and regional Accounts (ESA) was implemented in Icelandic national accounts in March 2006 and figures back to 1980 revised accordingly.

Commission Decision of 17 December 2002 further clarifying Annex A to Council Regulation (EC) No. 2223/96 as concerns the principles for measuring prices and volumes in national accounts. The Decision is quite extensive; Statistic Iceland has already implemented parts of it and intends to implement most of it in the next few years.

Finally see Regulation (EC) No. 1392/2007 of the European Par5liament and of the council of 13th of November 2007 amenidng the Council Regulation (EC) No. 223/96 with respect to the transmission of National Accounts data.

1. Contents

1.1 Description of content

The purpose of national accounts is to give a complete overview of the development of the economy in whole. The core item is the Gross Domestic Product (GDP) that shows the income generated in the production process that is available for disposal. GDP can be reached through two main approaches, the expenditure approach (disposal/use of income) and the production approach (generation of income). The main components of the expenditure approach are household and government consumption, gross fixed capital consumption and, exports and imports, where the output approach presents the value added by individual industries.

National accounts are created both at current and constant prices. The purpose of using constant prices (deflating) is to differentiate changes in value at current prices from year to year between price and volume changes. One of the main purposes of the deflation is to measure economic growth, i.e. the growth of GDP in real terms.
Many questions arise regarding what economic transactions should be included and how they should be measured. One aspect of national accounts is the importance of intertemporal and international comparability and, for that reason international guidelines have been developed for compilation of national accounts. Most countries follow the UN system of national accounts (SNA 93) and EU and EEA nations use a European version of that system (ESA 95).

1.2 Statistical concepts

The concepts that are used in national accounts are all based on the European System of National Accounts (ESA95). A few of the main concepts and the connection between these concepts are described here below, both according to the expenditure and the production approach.

The expenditure approach:
  • Household final consumption expenditure: Household final consumption expenditure consists of the expenditure, including imputed expenditure, incurred by resident households on individual consumption goods and services. Purchases of dwelling houses are the only household expenditure that is treated as fixed capital formation.
  • Government final consumption expenditure: Government final consumption expenditure consists of expenditure, including imputed expenditure, incurred by general government on both individual consumption goods and services and collective consumption services.
  • Gross fixed capital formation: Gross fixed capital formation is measured by the total value of a producers acquisitions, less disposals of fixed assets during the accounting period plus certain additions to the value of non-produced assets (such as subsoil assets or major improvements in the quantity, quality or productivity of land) realised by the productive activity of institutional units.
  • Gross domestic final expenditure: Consists of household final consumption expenditure, government final consumption expenditure and gross fixed capital formation including changes in inventories.
  • Gross Domestic Product (GDP): Is Gross domestic final expenditures including the value of exports of goods and services, less the value of imports of goods and services.

The production approach:
  • Compensation of employees: Compensation of employees is the total remuneration, in cash or in kind, payable by an enterprise to an employee in return for work done by the latter. Moreover, the value of the social contributions payable by employers is also included: these may be actual social contributions payable by employers to Social Security schemes or to private funded social insurance schemes to secure social benefits for their employees; or imputed social contributions by employers providing unfunded social benefits.
  • Operating surplus: The operating surplus measures the surplus or deficit accruing from production before taking account of any interest, rent or similar charges payable or any interest, rent or similar receipts receivable.
  • Gross value added: Is the sum of compensation of employees, operating surplus and consumption of fixed capital.
  • Gross Domestic Product (GDP): Is gross value added plus any taxes, and minus any subsidies, on products not included in the value of their outputs.

2. Time

2.1 Reference periods

The reference period of the figures in the annual national accounts is the calendar year and for the quarterly national accounts it is the quarter in which the economic activity occurs. The accrual accounting principle should be used, not cash accounting.

2.2 Process time

The first results for each year are published as provisional data in the middle of March the following year, i.e. 75 days after the end of the reference year. Revised figures are published as preliminary data in mid September, i.e. 240 days after the end of the reference year. Third revision is published in March the year after, i.e. 15 months after the end of the reference year. These figures are not marked as preliminary anymore, although they are not considered as final. The process time for data according to the production approach is a bit different. The first figures according to the production approach are published 15 months after the end of the reference year. Up to that time only some estimates with little industrial breakdown is published.

Quarterly national accounts figures are published 75 days after the end of the quarter. At same time previous quarters are then also revised. Quarterly data is also revised according to revisions of annual data.

2.3 Punctuality

The National Accounts are published according to Statistics Iceland advance release calendar. So far the publication has always been on schedule.

2.4 Frequency of releases

See section 2.2.

3. Reliability and security

3.1 Accuracy and reliability

In connection with the adoption of the European System of National Accounts, ESA95, in 2000 the methods of estimations and the levels of many items were examined and evaluated. At the same time, recommendations from Eurostat experts, that had examined the Icelandic national accounts in 1996 and 1997, were taken into account. After the adoption of ESA95 a very detailed description of methods used for compilation of national accounts at current prices was written at Eurostat request. In 2003, after the report had been written, a delegation of national accounts experts from Eurostat visited Iceland and their recommendations have been implemented into current methods.

The experience from other countries is that the accuracy of national accounts is best ensured by systematically balancing production and expenditure at a very detailed level. This balancing is done with supply & use tables and they have been created for 1997 and 2001 and 2002. They have been used to balance the results between the production and expenditure approach since 1997.

3.2 Sources of errors

Inaccuracy in the various source data that are used can affect the accuracy of the national accounts figures. However, the conceptual consistency and, over time, the uniform adaptation of the sources and systematic balancing contribute to reducing the inaccuracy of the national accounts figures.

3.3 Measures on confidence limits/accuracy

No specific measurements on confidence limits and accuracy in Icelandic national accounts have been carried out.

4. Comparison

4.1 Comparison between periods

It is fundamental, when compiling national accounts, that the figures should be comparable over time to the largest extent. However, fundamental changes of sources or classifications can upset the comparability. In cases where this happens the solution is to calculate one year according to both methods and connect the results on that year by chain-linking. As an example of a change like this, is the introduction of a new industrial classification (ISAT95) in 1997 where growth rates were chain linked, using the year 1997 as a chain.

4.2 Comparison with other statistics

In the case of national accounting the comparison with other statistics is limited by the fact that in many cases national accounts figures are based on various primary statistics. Therefore, comparison is more frequently done during the working process rather than at the final stage. An example is financial accounts of all enterprises in a certain activity compared with production accounts of the same activity and gross fixed capital formation compared with similar concept from the financial accounts of the enterprises.

However, comparisons with other statistics at a detailed industry level will often show differences, partly because of differences in definitions of variables, and partly because of the calendar year delimitation of the national accounts and its requirement of total coverage of the economic activity.

Internationally there is a high degree of comparability with the national accounts of other countries as they all follow the same standards.

4.3 Coherence between preliminary and final statistics

National accounts figures are never considered as final but 15 month after the end of the reference year the figures are not marked as preliminary anymore, cf. section 2.2.

5. Access to information

5.1 Forms of dissemination

  • News, released on Statistics Icelands website
  • Statistics, categorised statistical web tables
  • Statistical Series, Hagtíðindi
  • Statistical Yearbook of Iceland, Landshagir
  • OECD and Eurostat databases, accessible on their websites.
  • OECD: National Accounts of OECD countries, Volume I and II
  • Nordic Statistical Yearbook

5.2 Basic data; storage and usability

Source data is stored at Statistics Iceland. Access to more detailed data than has already been published is granted on an individual basis. In these cases the main principle is to uphold the confidentiality of the data in guidance with Statistics Iceland Rules of Procedure for Treating Confidential Data, which can be accessed on Statistics Icelands website.

5.3 Reports

The main publications about methods used in compilation of national accounts in Iceland are:

Gross National Income Inventory (ESA95) Iceland; Statistics Iceland, March 2004; on Statistics Icelands website. A very detailed description of methods used for compilation of national accounts at current prices. This report is requested by Eurostat and the structure of it is laid down by Eurostat. Similar report exists for all the member states of European Economic Area.

National Accounts 1945-1992 (in Icelandic)
; National Economic Institute, Reykjavik August 1994.

Description of method used for chain-linked volume measures, Statistical series: Gross Domestic Product - preliminary data 2004 - revision 1990-2004, 13 September 2005.

Description of method used for allocation of financial intermediation services indirectly measured (FISIM), Statistical series: Gross Domestic Product 2005 - provisional data, 14 March 2006.

5.4 Other information

Further information about specific parts of the national accounts are given by staff of the national accounts department, see list of staff.

© Hagstofa �slands, �ann 24-6-2013