QUARTERLY NON-FINANCIAL SECTOR ACCOUNTS OF DOMESTIC SECTORS AND REST OF THE WORLD SECTOR
NOTES ON METHODOLOGY
Sources and methods of data collection
Sources of data for the calculation of quarterly non-financial sector accounts are: national accounts data; the Ministry of Finance (MINFIN) – quarterly financial statements of the budget and budget users; Croatian National Bank (HNB) – the balance of payments; statistical information from the Croatian Pension Insurance Institute (HZMO) and the Central Registry of Insured Persons (Regos) – quarterly data on second pillar contributions and payments to heirs; Raiffeisen Pension Insurance Company (RMOD) – data on pensions paid from the second pillar; Croatian Pension Insurance Company (HRMOD) – data on pensions paid from the second pillar; Croatian Financial Services Supervisory Agency (Hanfa) – data on obligatory pension funds, voluntary pensions funds, undertakings for collective investment in transferable securities (UCITS) and alternative investment funds (AIF), as well as management fees; data of insurance companies; Paying Agency for Agriculture, Fisheries and Rural Development – quarterly data on EU subsidies; Central Depository & Clearing Company (SKDD) – dividend data; and GFI-NPISH – semi-annual financial report of non-profit institutions.
Coverage
The calculation covers all categories following the concept of the System of National Accounts (SNA 2008) and the European System of National Accounts (ESA 2010). The sectoral classification is based on the European sectoral classification defined in the European System of Accounts (ESA 2010). This classification is in accordance with the international sectoral classification defined in the System of National Accounts 2008 (SNA 2008).
Definitions
Quarterly non-financial sector accounts are part of the national accounts system and provide a description of the economy in general and transactions between persons, businesses and institutions. National accounts also include transactions between Croatia and the rest of the world. Coherent quarterly time series have been available since the first quarter of 1999.
Quarterly non-financial sector accounts provide an overview of the activities and development of the Croatian economy and contain key indicators such as gross value added (GVA), consumption, investments, exports and imports, earnings and income from assets and profits.
Revisions are an essential part of good practice in the production of quarterly and annual national accounts (NA) data. They enable statisticians to provide users with timely and highly accurate data. Data for these statistical areas are collected from a wide range of sources and harmonised based on an agreed set of international guidelines. Data from the various sources used to estimate macroeconomic aggregates become available with varying degrees of timeliness; structural sources, for instance, may require up to three years or more.
The Croatian Bureau of Statistics also produces and transmits to Eurostat data tables on non-financial accounts by sector (both annual and quarterly), which must be consistent with other tables. The goal is full consistency between main aggregates (data on gross domestic product (GDP)) and general government main aggregates at both annual and quarterly levels: for quarterly data, this applies at each transmission; for annual data, it applies in September, when data on GDP as well as data on government finance statistics (GFS) and excessive deficit procedure (EDP) are fully revised and harmonised. During the EDP clarification period following the March and September EDP reporting rounds, revisions to GFS data may occur, potentially leading to inconsistencies between GDP and GFS figures within the quarterly and annual sector accounts. The users of statistical data are informed about revisions on the website of the Croatian Bureau of Statistics in accordance with the Revision Policy for the Domain of National Accounts and Government Finance Statistics / Excessive Deficit Procedure Statistics.
The grouping of institutional units is carried out on the basis of their basic functions, behaviors and objectives for which they are established. These groups are called institutional sectors or, shorter, sectors. Each institutional unit belongs to only one sector, and each sector is divided into sub-sectors according to criteria relevant to that sector. Non-financial sector accounts are prepared on a quarterly basis for three sectors of the economy, which is in line with the transmission programme for countries with less than 1% of EU GDP.
The basic division was carried out for three sectors:
- Total economy (S.1)
- General government (S.13)
- Rest of the world (S.2).
The total economy sector (S.1) consists of the non-financial corporation sector (S.11), the financial corporation sector (S.12), the general government sector (S.13), the households sector (S.14), and the non-profit institutions serving households (NPISH) sector (S.15).
The general government sector (S.13) consists of institutional units which are non-market producers, whose output is intended for individual and collective consumption, and are financed by compulsory payments made by units belonging to other sectors, and institutional units principally engaged in the redistribution of national income and wealth.
The rest of the world sector (S.2) consists of non-resident units which are engaged in transactions with resident institutional units or have other economic links with resident units. Its accounts provide a general overview of the economic relationships between the national economy and the rest of the world. The institutions of the EU and international organisations are included.
Classification of accounts
For each of the three main sectors, sector accounts are drawn up that show all relevant transactions and balance sheet items. The following six accounts are relevant for the institutional sectors:
1. Production account shows the value added that was created in resident production units.
2. Income generation account shows how much gross value added (GVA) remains per sector, in the form of operating surplus or mixed income, after paying employees and taxes, and before net property income.
3. Allocation of primary income account observes institutional sectors as recipients of primary income (income received by resident institutional units due to participation in the production process and property income from financial assets or tangible non-produced assets). This account shows how operating surplus (mixed income) and net primary income result in gross national income.
4. Allocation of secondary income account shows how the balance of the primary income of an institutional sector is allocated by redistribution of current taxes on income, wealth etc., social contributions and benefits (excluding social transfers in kind) and other current transfers.
5. The use of disposable income account includes the concept of final consumption expenditure financed by the various sectors concerned (households, general government, and non-profit institutions serving households). The balancing item in the use of disposable income account is saving.
6. Capital account records acquisitions less disposals of non-financial assets by resident units and measures the change in net worth due to saving (final balancing item in the current accounts) and capital transfers.
Balancing items of sector accounts
Balancing items are aggregate indicators for the purposes of macroeconomic analyses and comparisons in time and space. Non-financial sector accounts are based on a sequence of accounts by institutional sectors. These accounts are current and are part of the accumulation account of capital accounts. Current accounts refer to the production, distribution and redistribution of income and its use in the form of final consumption. They make it possible to calculate savings, which is an essential factor of accumulation.
Gross domestic product at market prices (GDP, B1GQ) is the final result of the production activity of resident producer units. It can be defined in the following three ways:
(a) Production approach: GDP is the sum of gross value added of the various institutional sectors or the various industries plus taxes and less subsidies on products (which are not allocated to sectors and industries). It is also the balancing item in the total economy production account;
(b) Expenditure approach: GDP is the sum of final uses of goods and services produced by resident institutional units (final consumption and gross capital formation), plus exports and minus imports of goods and services;
(c) Income approach: GDP is the sum of uses in the total economy generation of income account (compensation of employees, taxes on production and imports less subsidies, gross operating surplus and mixed income of the total economy).
Gross operating surplus (B2G) is income that is a result of an activity before taking into account interests, rents and other costs payable or receivable by an institutional unit. It represents the part of income that derives from capital used in the production process. It is the basis for calculating the profit share, the key performance indicator of non-financial corporations in national accounts.
Gross mixed income (B3G) of total economy is equal to gross mixed income of the households sector.
Gross national income (at market prices) (B5G) represents the total primary income receivable by resident institutional units: compensation of employees, taxes on production and imports less subsidies, property income (receivable less payable), (gross or net) operating surplus and (gross or net) mixed income. Gross national income (at market prices) equals GDP minus primary income payable by resident institutional units to non-resident institutional units plus primary income receivable by resident institutional units from the rest of the world.
Gross disposable income (B6G) is income available to the total economy or to an individual sector for consumption and saving. Gross disposable income of the total economy is the sum of disposable incomes of all institutional sectors and is equal to the national income, adjusted for current transfers between resident units and non-resident units (plus received from abroad minus payable abroad). Current transfers are current taxes on income, wealth, etc., social contributions and benefits, and other current transfers. Gross disposable income is of particular importance for the households sector as the level of income largely influences the level of household consumption, which is one of the key criteria of material wellbeing.
Gross adjusted disposable income (B7G) is derived from the gross disposable income of an institutional unit or sector by adding the value of social transfers in kind receivable by that unit or sector and subtracting the value of the social transfers in kind payable by that unit or sector.
Gross saving (B8G) is the part of the gross disposable income that is not spent as final consumption expenditure. Gross saving represents the link between current and accumulation accounts. Its value is positive if the value of disposable income is higher than the value of final consumption or negative if the value of disposable income is lower than the value of final consumption.
External balance of goods and services (B11) is the difference between imports of goods and services and exports of goods and services. A positive value indicates that the total economy has generated a surplus with the rest of the world in the trade in goods and services. The external balance of goods and services is the balancing item of the external account of goods and services, which is part of the rest of the world account. Its value is shown from the rest of the world perspective, with the opposite sign.
Current external balance (B12) is the surplus (if positive) or the deficit (if negative) of the total economy with the rest of the world in current transactions (trade in goods and services, primary incomes and current transfers). Current external balance is the balancing item of the external account of primary incomes and current transfers and is shown from the rest of the world perspective.
Net lending (+)/net borrowing (–) (B9) is a balancing item of the capital account and an important link between non-financial and financial accounts. The balancing item of the capital account is conceptually identical to the balancing item of the financial account. The discrepancy between them is mostly due to different data sources used in the calculation of non-financial and financial accounts. This indicator represents, if positive, net resources that the total economy makes available to the rest of the world, or, if negative, net resources that the total economy receives from abroad.
A positive value of the indicator for an institutional sector indicates that this sector is (directly or indirectly) financing other sectors and a negative one that it borrows from other sectors. This indicator is also known as surplus (+)/deficit (–). Net lending (+)/net borrowing (–) of the total economy is equal to net lending (+)/net borrowing (–) of the rest of the world with the opposite sign.