Revision of the national accounts following the switch to ESA 2010
As a result of the above-mentioned changes, both the nominal and real GDP levels have shifted upwards (see Chart 1). The largest shift has occurred for gross capital formation owing to the methodological changes regarding investment. The biggest contributors to the shift are a change to the capitalisation of small tools and the inclusion of research and development in investment. Household consumption has also been revised upwards owing to new estimation methods for housing services (a different method for calculating imputed rent and more precise data on the number of houses) and to a lesser extent to methodological changes in the area of non-life insurance. The revisions of other expenditure items are almost negligible from the longer-term perspective.
Chart 1 (BOX) Revision of nominal GDP
The level of GDP has been increased by CZK 40-50 billion due to the revision
(difference in GDP before and after revision; CZK billions; current prices; seasonally adjusted)
In early October 2014, the CZSO published an extraordinary revision of the national accounts following the switch to the new European ESA 2010 methodological standard, which is based on the global SNA 2008 standard. The most important changes pertain to expenditure classified as investment in gross fixed capital. In line with ESA 2010, fixed investment now also includes assets with lower acquisition costs and a useful life of over one year (typically computers and telephones), military expenditure on long-term assets, and research and development expenditure. In addition, methodological changes have been made in the area of non-life insurance. Besides the implementation of ESA 2010, changes have also been made to the sources and methods used, along with a standard annual revision of the national accounts.
By contrast, the revision of the historical data has had only a relatively small impact on the dynamics of total real GDP (see Chart 2). Annual real GDP growth has been revised slightly upwards from 2011 onwards (with the exception of the first two quarters of 2014). This is due mainly to slightly higher annual growth in household consumption and government consumption, whereas the much larger revisions made to gross capital formation and net exports roughly offset each other in the individual quarters. As regards annual investment growth in real terms, the volatility of this time series has decreased considerably after the revision (at the expense of higher volatility of the investment deflator); the effect of cigarette frontloading linked with excise duty changes is no longer visible here.
Chart 2 (BOX) Revision of annual GDP growth
The revision of the annual growth rate of GDP is only modest
(annual changes in percentage points; current prices; seasonally adjusted)