Seminar on the implementation of theSystem of National Accounts 2008 for
Caribbean countries
Antigua, Antigua and Barbuda, 14-16 June 2010
Herman SmithUNSD/DESA
The financial crisis – The need for high frequency indicators
Introduction
Consultations on the Financial and Economic Crisis
The G20 Summit of April, 2009
International seminars organised by United Nations Statistics Division and Eurostat
Consultations on the crisis
High Level Forum the Long-term Development the SNA, Washington D.C. , 17-18 November
Official Statistics and the Impact of the Global Financial Crisis, New York, 22 February
High Level Forum on Globalization and Global Crisis: the role of Official Statistics, New York, 23 February
40th Session of the Statistical Commission
Outcome of the consultations on the crisis
2008 SNA the overarching framework for economic statistics, able to incorporates measurement issues arising from the financial crises
There was not a lack of information
Policy makers need the early detection of turning points of financial and economic trends
Remedy data gaps that the crisis has revealed
Improve the availability, periodicity and timeliness of high frequency statistics in accessible and analytically useful formats
International coordinated response The G20 Summit of April, 2009 called for:
the UN, working with other global institutions, to establish an effective mechanism to monitor the impact of the crisis on the poorest and most vulnerable
the IMF and FSB to explore information gaps and provide appropriate proposals for strengthening data collection.
International coordinated response the United Nations System Chief Executives
Board for Coordination (CEB) at its April 2009 meeting in Paris decided to “… urgently establish an United Nations system-wide vulnerability monitoring and alert mechanism to track developments, and report on the political, economic, social and environmental dimensions of the crisis”.
the Secretary-General initiated activities to establish an UN system-wide Global Impact and Vulnerability Alert System (GIVAS) - consisting of a Global Impact and Vulnerability Data Platform and a series of Global Alert Products.
Inter Agency Group on Economic and Financial Statistics
◦ IMF (Chair), BIS, ECB, Eurostat, OECD, UN, IMF (Chair), BIS, ECB, Eurostat, OECD, UN, WB established the IAG to coordinate work WB established the IAG to coordinate work to explore data gaps and strengthen data to explore data gaps and strengthen data collectioncollection
◦The IAG Group addresses key issues related to information gaps on risks
in the financial sector, data on international financial networks vulnerabilities of domestic economies to
shocks and the development of the website on Principle
Global Indicators (PGI)
International seminars on High Frequency Indicators
UNSD and Eurostat in February 2009 initiated a series of three international seminars.
The purpose of the seminars is to formulate an international statistical response to the economic and financial crisis for improved monitoring of the rapid and systemic changes in the global real economy and the financial markets and the impacts on vulnerable countries and population groups.
It is expected that the series of seminars will recommend an agreed data template for high frequency statistics, related metadata and related communication and dissemination methods and techniques
International seminars on High Frequency Indicators
The first meeting took place in Ottawa, May 2009, which discussed the development of a data template of high frequency indicators;
Outcome of the Ottawa seminar
Support for an international data template for high frequency statistics to monitor economic activity and detecting changes
determine its relevance and feasibility in terms of availability, periodicity, timeliness and dissemination through global baseline assessment
re-arrange the data template in different tiers based on analysis of global assessment
the high frequency statistics for individual countries should be complemented by analytical indicators and time series of world and regional aggregates for those high frequency statistics which are sufficiently comparable.
Outcome of the Ottawa seminar (cont)
develop a glossary of terms and definitions around high frequency statistics (covering terms like nowcast, forecast, flash, rapid and first estimate, etc.)
clarify the need to develop new manuals or update existing handbooks and guidelines on GDP flash estimates, and economic sentiment surveys and composite indicators
determine how to better communicate and disseminate data on the movement of the business cycles and trend developments
Ottawa seminar identified a data template with 12 categories
National accounts, production and turnover indicators, prices, labour market indicators, sectoral indicators for the external, financial, government, non-financial and household sector, financial and real estate market indicators, and economic sentiment indicators
Global assessment to determine the availability, timeliness, periodicity and dissemination of high frequency indicators
Global assessment of Ottawa template
Overview of response
GroupingNumber of responses
Number in group
Percentage of 2008 GDP
Percentage of 2008
population Response rate
World 101 211 87.8 80.2 47.9
High income
24 29 89.5 90.2 82.8
Middle income
53 103 89.4 91.4 51.5
Other 24 79 55.2 21.5 30.4
CARICOM 7 20 66.2 28.8 35.0
1 2 3 4 5 6 7 8 10 12
Set Number
Pe
rce
nt
02
04
06
08
01
00
Percentage of countries compiling
Response by question
Response by question
1 2 3 4 5 6 7 8 9 10 11 12
AnnuallyQuarterlyMonthlyWeeklyDaily
Set Number
Pe
rce
nta
ge
of C
ou
ntr
ies
02
06
01
00
Periodicity
1 2 3 4 5 6 7 8 9 10 11 12
More than 180180 or less90 or less60 or less30 or less7 or less
Set Number
Pe
rce
nta
ge
of C
ou
ntr
ies
02
06
01
00
Timeliness
National Accounts mainly annual Production and turnover – only 2 quarterly, another
has retail trade monthly CPI monthly – PPI and I&E indices weak Employment data – mainly annual CB and Monetary stats – quarterly and monthly mix Monthly GG data Almost no HH and Non-Fin corps Weak financial market data No residential property Only has confidence indicators
Response by CARICOM Countries
Ottawa data template of a core set of indicators by categories with regional and world totals is feasible
The template is recognized as appropriate for monitoring rapid and systemic changes in the real economy and the financial markets
Three levels or tiers were recognized
Outcome of the assessment
Tier 1 - includes indicators that are compiled infra annually by more than 60 per cent of counties.
Tier 2 - includes indicators that are compiled infra annually by between 30 to 60 per cent of high and middle income countries and is supplemented by strategically important indicators.
Tier 3 - includes indicators below a 30 per cent response rate that can be included in national templates.
Three Tier Approach
Tier 1Indicator description Periodicity
Set 1 National accounts
1.1 Quarterly national accounts: Flash GDP estimate Quarterly
1.2.1 GDP full release by expenditure Quarterly
1.2.2 GDP full release by production Quarterly
Set 2 Production and turnover
2.1 Production index for industry, by major division (mining, manufacturing, electricity, water, etc.)
Monthly
Set 3: Price Indicators
3.1 Consumer price index Monthly
3.2 Producer price index Monthly
3.3 Import price index Monthly
3.4 Export price index Monthly
Set 4: Labour market indicators
4.1 Unemployment Quarterly
4.2 Unemployment rate Quarterly
4.3 Employment total and by economic activity Quarterly
Set 5: External sector indicators
5.1 Exports and imports (of goods and services) Monthly
5.3 Official reserve assets Monthly
5.4 External debt (by sector, maturity and foreign currency) Quarterly
Tier 1Indicator description Periodicity
Set 6: Financial sector indicators
6.1 Central Bank net foreign assets Monthly
6.2 Central Bank domestic lending Monthly
6.3 Central Bank reserve money Monthly
6.4 Depository corporations net foreign assets Monthly
6.5 Depository corporations domestic lending Monthly
6.6 Depository corporations broad money liabilities Monthly
Set 7: General government sector indicators
7.1 Revenue Monthly
7.2 Expense Monthly
7.3 Net operating balance (= Revenue – Expense) Monthly
Set 10: Financial market indicators
10.1 Interest rates, as relevant short and long term money and bond market rates
Monthly
10.2 Exchange rates, as relevant spot and forward markets Monthly
10.3 Nominal and real effective exchange rate Monthly
10.4 Stock market indicators Monthly
Tier 2Indicator description Periodicity
Set 1 National accounts
1.2.3 GDP full release by income Quarterly
Set 2 Production and turnover
2.2 Production index for construction Monthly
2.3 Turnover index for retail trade by major division Monthly
2.4 Turnover index for industry by major division Monthly
2.5 Turnover index for other services by major division (excluding financial services and non-commercial services)
Monthly
2.7 New orders index for construction (building permits or housing starts)
Monthly
Set 4: Labour market indicators
4.4 Hourly wage rate Quarterly
4.5 Hours of work Quarterly
Set 5: External sector indicators
5.2 International investment position (IIP), specify balances and components
Quarterly
Tier 2Indicator description Periodicity
Set 6: Financial sector indicators
6.7 Other financial corporations balance sheet, assets and liabilities by sector.
Monthly
6.8 Financial corporate profits Quarterly
6.9 Financial corporate debt Monthly
Set 7: General government sector indicators
7.4 Net acquisition of non-financial assets Quarterly
7.5 Expenditure Quarterly
7.6 Net lending/net borrowing (= Revenue - Expenditure) Quarterly
7.7 Gross debt Quarterly
Set 8: Household sector indicators
8.1 Household disposable income Quarterly
8.2 Household saving Quarterly
8.3 Household debt Quarterly
Set 11: Real estate market indicators
11.1 Residential property price index Quarterly
Set 12: Economic sentiment
12.1 Consumer confidence Monthly
12.2 Business confidence Monthly
Tier 3
Indicator descriptionCompilation
per cent Periodicity
Set 2 Production and turnover
2.6 New orders index for industry by major ISIC division (for those that work on order)
Monthly
2.8 Commodity production (as relevant at country level data on commodity productions and other indicators of economic activity)
Monthly
Set 9: Non-financial corporations sector indicators
9.1 Non-financial corporate profits Quarterly
9.2 Non-financial corporate debt Quarterly
Set 11: Real estate market indicators
11.2 New house sales Monthly
11.3 Existing house sales Monthly
Set 12: Economic sentiment
12.3 Composite Business Cycle Indicators
12.3.1 Leading Indicator Monthly
12.3.2 Coincident Indicator Monthly
12.3.3 Lagging Indicator Monthly
Analytical indicators Some work was done on the type and
availability of a comparable set analytical indicator to facilitate economic analysis
The availability of analytical indicators at country level at agreed periodicity would significantly enrich the analysis of the regional and global aggregates, because of its supplementary and more detailed information content
Examples of analytical indicators
◦ Inventory over sales ratio◦ Household debt to household disposable income◦ Growth in equity prices relative to GDP growth◦ Financial Conditions Index◦ Etc
International seminars on High Frequency Indicators
The second meeting took place in Scheveningen, December 2009, which discussed a global assessment of the Ottawa data template and the development of methodology and guidance on high frequency indicators.
Scheveningen seminar
Five themes: ◦ the role of sentiment indicators in tracking
economic trends; ◦ the role of composite indicators in tracking
business cycles; ◦ flash estimates of gross domestic product; ◦ the analytical framework for assessing rapid
economic changes; and ◦ communication and dissemination of indicators
Outcome: ◦ To facilitate the work on the outcome of the
seminar five work groups were formed
Work groups
The Working Group on Economic Sentiment Indicators will conduct a global survey on sentiment indicators and analyse existing practices. Moreover, UNSD will establish a knowledge platform on economic sentiment indicators.
The Working Group on Composite Indicators will undertake the review of existing guidelines on the collection, compilation and application of composite indicators. ◦ Colloquium – Sept 2010. ◦ CIRET – Oct 2010
Work groups
The Working Group on Flash GDP will advance the work on terminology, conceptualisation and purpose of flash GDP estimates.
The Working Group on the Data Template and Analytical Indicators will finalise the data template, meta data and related analytical indicators.
The Working Group on Communication and Dissemination will create a knowledge base and review the availability of existing visualisation tools and methodological guidance.
Third International Seminar on High Frequency Statistics
November 2010 in Russia
Purpose◦ Discuss the work of the working groups◦ To prepare a report to the UNSC on
an agreed statistical framework of HFI international comparability of HFI, the related analytical framework for monitoring
early warning and business cycle indicators the communication and dissemination of HFI
Conclusion
The financial crisis revealed the need for HFI for the early detection of changes in economic trends
The availability of structural and annual data tell us about the past
The need is for information about the present
This will facilitate more timely policy responses
Data collection practises need to be adapted to facilitate the dissemination of HFI
HFI are also relevant for expanding the scope and detail of the national accounts
Useful links
Reports of the previous meetings:
Ottawa
http://unstats.un.org/unsd/nationalaccount/workshops/2009/ottawa/ac188-2.asp
Scheveningen
http://unstats.un.org/unsd/nationalaccount/workshops/2009/netherlands/ac202-2.asp
SNA News and Notes Issue 29
http://unstats.un.org/unsd/nationalaccount/sna/nn29-en.pdf
Thank You
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