CATASTROPHIC NATURAL DISASTER AND NATIONAL ACCOUNTS: JAPAN’S EXPERIENCE

Working Party on National Accounts, OECD, Paris25-28 October, 2011

Kosuke SUZUKIDepartment of National AccountsEconomic and Social Research InstituteCabinet Office of Japan

OUTLINE OF THE GREAT EAST JAPAN EARTHQUAKE Occurred at 2:46 pm (JST) on 11 March

Epicenter: ｔ he northeast of Japan Seismic scale: M 9.0

The extent of damage Around 20,000 are dead or missing More than 70,000 are still living in temporary

shelters. Amount of damage in tangible assets: 16.9

trillion yen ($ 220 billion) cf. Japan’s nominal GDP in 2010: 479 trillion yen

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OUR CHALLENGES: PAST AND FUTURE

Source data problems Delay Missing

Modification in compilation methodology Projection Adjustment Scope

Conceptual issues Treatment of unusual economic transactions

User Communication

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SPECIAL TREATMENT IN QUARTERLY NATIONAL ACCOUNTS: OVERVIEW

Quarterly National Accounts in Japan GDP (expenditure side), its components, and

compensation of employees Release schedule

Advance estimates: after approx. 1 month and 2 weeks Revised estimates: after approx. 2 months and 10 days

Advance GDP estimates for the first quarter of 2011 were due out on 19th of May…

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SPECIAL TREATMENT IN QUARTERLY NATIONAL ACCOUNTS: PROJECTION

Mechanical projection in the advanced estimates In advanced estimates, some data for the third month

of the reference quarter cannot be obtained. Huge deviations were obviously expected… WE NEEDED to maintain the accuracy of our

estimates and to avoid a later big revision. Usage of alternative data

Other proxies Data published by private business associations Anecdotal information

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FIGURE 1: UNPRECEDENTED FLUCTUATION IN SOURCE DATA

An illustration: Sales of Amusement and Theme Parks

(Source) “Survey of Selected Service Industries” (METI). Trend estimate is calculated by author.

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FIGURE 2: REVISION TO THE ADVANCE ESTIMATES

Comparison of growth rates for Q1 2011（ Changes from previous quarter, %, seasonally adjusted, chain

volume ）

　 　Advance estimates

Revised estimates

Gross Domestic Product -0.9 -0.9Private consumption -0.6 -0.6Private residential investment 0.7 0.7Private non-residential investment -0.9 -1.3Private inventory (*) -0.5 -0.4Government consumption 1.0 0.9Public investment -1.3 -1.4Public inventory (*) 0.0 0.0Exports 0.7 0.7

　 Imports 2.0 1.9

(Note) Figures for inventories are contributions to GDP growth rates. 7

SPECIAL TREATMENT IN QUARTERLY NATIONAL ACCOUNTS: SOURCE DATA

Revised GDP estimates are calculated using “Financial Statements Statistics of Corporations by Industry” (FSSCI, Ministry of Finance). Investment and inventory series

Revised GDP estimates were due out on 9 June. Delay in FSSCI publication

Provisional results for Q1: 2 June Final results for Q1: 29 July

Adjustment in investment estimation Revision to private investment: -1.3% → -1.4%

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SPECIAL TREATMENT IN QUARTERLY NATIONAL ACCOUNTS: OTHER ISSUES

Adjustment in parameters Work-in-progress of housing construction, etc.

Conceptual Issues Example: clearance of rubble

User communication: advance announcement Timing

27 April for the advance estimates (published 19 May) 1 June for the revised estimates (published 9 June)

Contents

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ISSUES FOR ANNUAL ESTIMATES Annual National Accounts in Japan

Fiscal year: from April to March of next year Released in winter of next year

Estimates for Fiscal 2011 will be due out in December 2012/January 2013

Items we need to tackle: Source data problems Reconsideration of estimation methodology/scope

Example: treatment of “transfers” Conceptual issues

Example: estimation of nonlife insurance services

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IMPLICATION/ISSUES FOR DISCUSSION

Good opportunity to review current estimation framework Dealing with source data problems Adjustment in estimation methods Revisiting conceptual issues

There is also a need to consider data sources and estimation methods for new items.

Improvement in public relations Conceptual issues: some borderline cases

Are benefits in kind to victims collective or individual consumption?

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