Extraordinary revision of the quarterly national accounts
One of the key factors affecting the message of the new forecast and its comparison with the previous one is an extraordinary revision of the quarterly national accounts that was published by the CZSO in December 2011 and applies to the entire available time series. Overall annual GDP growth was revised only slightly, but a more significant reassessment was made in the expenditure component breakdown of GDP. Not only were the levels and growth rates revised, but also the reference year for constant prices was changed from 2000 to 2005.
Household and government consumption underwent a significant revision. The time series were shifted upwards in connection with more accurate estimation of imputed rents and the grey economy (see Chart 1). In nominal terms, household consumption was increased by around CZK 44 billion on average every year.
Chart 1 (Box) Changes in household consumption
The level of nominal household consumption was shifted upwards
(CZK billions; seasonally adjusted; annual percentage changes in real consumption before and after revision – right-hand scale)
According to the CZSO, the revision of the net exports data was due among other things to better recording of quasi-transitive trade and direct trade costs linked with trade in goods. These methodological changes gave rise to an increase in the nominal foreign trade balance before 2005 and a decrease thereafter (see Chart 2). Simultaneously, the growth rates of the export deflators were revised downwards and those of the import deflators upwards, resulting in a deterioration of the terms of trade. Overall, these effects increased real net exports. At the same time, the annual growth rates of real exports and imports in recent years were reduced (on average by 2.2 and 2.4 percentage points respectively in 2004–2010). From the perspective of the new forecast relative to the previous one, the downward revision of nominal net exports in the national accounts had the largest impact. It contributes significantly to a change in the nominal exchange rate path at the forecast horizon towards slower appreciation (with an impact of roughly CZK 1/EUR at the longer end of the forecast).
Chart 2 (Box) Changes in nominal net exports
The level of nominal net exports was revised downwards significantly
(CZK billions; seasonally adjusted)
The data on the remaining expenditure component, i.e. real gross capital formation, were also revised upwards. This applied solely to fixed investment, while change in inventories was reduced slightly. According to the CZSO, the changes in investment were due mainly to better methods for estimating individual housing construction and the inclusion of capitalisation of internally developed software.