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National Accounts Framework for the ICP 2011 Round

The ICP is a major statistical exercise which requires a great deal of cooperation and coordination between prices statisticians and national accountants. Inevitably, a large part of the overall work program is directed at identifying the representative and comparable products to be priced and then collecting the prices required to produce PPPs.  However, the national accounts are a critical part of the overall ICP.  PPPs are of no use unless other relevant data are available to use with them.  For example, PPPs are combined with national accounts data to produce real expenditures expressed in a common currency, which can be used to compare the relative size of countries.  PPPs can also be combined with exchange rates to provide price level indexes (PLIs), which show the relative price levels in different countries thereby enabling countries to be compared on the basis of whether they are “expensive” or “cheap” to live in or to visit.

It is therefore clear that the national accounts have a major impact on the overall outcomes of the ICP and one of the aims in the 2011 round is to improve the quality of the national accounts data.  Any errors in the national accounts data will have a direct impact on the real expenditures derived by applying PPPs to the national accounts values.

The System of National Accounts is, by the nature of the ICP, the reference framework for the determination of PPPs. This entails specifying the detailed ICP requirements for national accounts data, the major uses of these data and possible methods of estimating detailed data for those countries that do not compile their accounts at the level required for the ICP. These requirements will be useful to all the countries, whether they are implementing the System of National Accounts for the first time, improving their national accounts, upgrading the coverage of their accounts (particularly producing expenditure-based gross domestic product (GDP) estimates for the first time), or reviewing their national accounts to meet all the standards of the System of National Accounts 1993.

The Global Office is developing the above in the form of an ICP-related national accounts framework, under which expenditure values will be compiled. Relevant series of sequenced activities are being defined, which national accountants in ICP participating countries where national accounts systems are not highly developed will carry out to compile detailed GDP expenditures consistently with prices collected in ICP surveys. It is worth underlining that the 2011 ICP will use the System of National Accounts 1993 because the vast majority of countries will still be implementing this version of the system in 2011. The sequenced activities mentioned above will be customized according to whether a particular country is still using an older version or has already migrated to the System of National Accounts 2008.