RESTRICTED

CONFERENCE ON STRENGTHENING SECTORAL POSITION AND

FLOW DATA IN THE MACROECONOMIC ACCOUNTS

Jointly organized by the IMF and OECD

February 28–March 2, 2011

IMF Headquarters 2 (HQ2)

Conference Hall 1 & 2 (lobby level)

1900 Pennsylvania Ave NW, Washington, DC, 20431

Integrated Euroarea Accounts: Main Issues and Challenges (ECB)

To be presented in Session 3, Item 4 by Gabriel Quirós, European Central Bank

The views expressed in this presentation and web links to presentations that will be considered at the Conference

“Strengthening Sectoral Position and Flow Data in the Macroeconomic Accounts” are those of the authors only, and the

presence of them, or of links to them, on the IMF website does not imply that the IMF, its Executive Board, or its

management endorses or shares the views expressed in the presentations.

1

Integrated Euro Area Accounts Main issues and challenges

Tjeerd Jellema and Gabriel Quirós

Euro Area Accounts and Economic Data Division

European Central Bank

IMF/OECD Conference on Strengthening Position and Flow Data in the

Macroeconomic Accounts

Washington, 28 February – 2 March 2011

2

Euro Area Accounts new developments

An overview

- Main features

- Data sources and compilation issues

User needs and medium term priorities

- Timeliness

- Who to whom detail

- Non-financial assets

- Seasonal adjustment

- Country data, European Systemic Risk Board

3

What are the EAA? synopsis of the accounts

GDP

M3

HH Consumption

Gov Deficit

Gov Debt

Available in 2007 Balance of Payments

M acro Economic Data BSI Statistics (M FI Balance Sheets)

4

EAA and national accounting

• National accounts (and thus EAA) follow three guiding principles

–Completeness and comprehensiveness. Are all EA countries accounted for? All instruments and transactions?

Do we properly reflect the EA as an economic area?

–Compliance with the international standards (ESA, SNA)

Are all the data, including from the building blocks, conform the international and European manuals? Need for adjustments.

–Consistency (i.e. Integration, Confrontation and

Reconciliation) Are the internal accounting constraints of the sector accounts met?

Are developments consistent with underlying building blocks?

5

Importance of integration

- Consistency in the sector accounts transactions

Principle of quadruple accounting

GS S1 S1N S11 S12 S13 S14_5 S2 GS S1 S1N S11 S12 S13 S14_5 S2

Goods a

nd

Serv

ices

Tota

l

Econom

y

Nom

inal

secto

r

Non-f

inancia

l

corp

ora

tions

Fin

ancia

l

corp

ora

tions

Genera

l

Govern

ment

Hopusehold

s

and N

PIS

H

Rest of th

e

World

Goods a

nd

Serv

ices

Tota

l

Econom

y

Nom

inal

secto

r

Non-f

inancia

l

corp

ora

tions

Fin

ancia

l

corp

ora

tions

Genera

l

Govern

ment

Hopusehold

s

and N

PIS

H

Rest of th

e

World

B1G Value Added/GDP

D1 Compensation of Employees

D21-D31 Taxes less subsidies on products

D29-D39 Other Taxes less subsidies on production

D4 Property Income

D5 Taxes on income and wealth

D61 Social security contr.

D62 Social security benefits

D7 Current transfers

D8 Equity attr to policy holders

D9 Capital Transfers

K1 Consumption offixed capital

K2 Acq .-disp. of non-prod non-fin assets

P3 Final consumption

P5 Gross Capital Formation

P6 Exports

P7 Imports

B9 Net lending

B9F Net lending

F1 SDR and Monetary Gold

F2-4 Currency, Deposits, Loans

F3 Securities oth. Than shares

F5 Shares

F6 Insurance technical reserves

F7 Oth. accs receivable/payable

No

n f

inan

cia

l acco

un

ts

Fin

an

cia

l

Acco

un

ts

Euro area accounts Uses Resources

Transactions

+x +x

-x +x

6

EAA Compilation model

National Quarterly

Non Financial

Accounts

ESA95

Transmission

programme

National

Quarterly Financial

Accounts

MUFA Guideline

National

contributions

b.o.p./i.i.p.

National

contributions

b.o.p./i.i.p.

National

b.o.p./i.i.p.

National

b.o.p.

Banking Statistics

National

Contributions

(BSI, IF, SPC,

ICPF)

National Quarterly

non-financial

Government

Accounts

ESA95

National

Quarterly Financial

Accounts General

Government

ESA95 TP

National level

National Accounts Primary statistics

Aggregation of

national data and

estimation of

missing data, EA

resident sectors

Aggregation of

national data and

estimation of

missing data, EA

resident sectors

Euro Area b.o.p./

i.i.p.

Aggregation of

national

contributions

First reduction of

errors and

ommissions and

asymmetries

Dis

cre

pan

cies

Discrepancies

Banking

Statistics

(BSI, IF, SPC,

ICPF)

Euro area

National Accounts Building Blocks

Euro Area Integration of sources

Integrated Euro Area Economic Accounts : Compilation model

• National Datasets

– Integration of primary

data at national level

– Consistency

• Building blocks

– External account EA

– Policy relevant sectoral

data sets (Banking and

Government)

• Data source selection and

reconciliation

7

Medium perspective and achievements

• High frequency (Q) to capture business cycle

• Structural relationships

• Timeliness of estimates (t+120 => t+90) [ESA 2010 : 2014]

• Complete and consistent accounts

– Who to whom detail (loans and deposits )

– Volume series

(Macro aggregates , Value added by sector , GFCF by sector (review)

– Non-financial assets

– Full consistency (S12, S13, S2 )

• Seasonal adjustment (Further development in 2011)

• Revision policy (Alignment between NA and BOP : 2014)

8

Who to Whom detail

• Data on loans and deposits obtained from

comprehensive national data sources.

• National data sources not only distinguish counterpart

sectors within the national economy, but also in other EA

countries, in order to compile EA aggregate

• National W2W data is complemented by building block

data.

• Difficult choices in reconciliation; hierarchy of sources

and counterpart sector delineation (general government)

and rules of recording (banking statistics).

• After 2012: W2W for securities?

9

Example of W2W : A credit-less recovery?

Issuance of loans to non-financial corporations, by lender, seasonally adjusted

Source: EAA, ECB and Eurostat

NFC Value Added, quarterly growth, seasonally adjusted • Decline in banks

loans partly buffered

by non bank

financials loans

(2009Q1) and inter-

company loans

• Recovery in value

added preceding pick

up in loan financing:

- use of spare

capacity

- internal financing

(undistributed

profits)

-100

-50

-

50

100

150

200

250

300

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

'06 2007 2008 2009 2010

EU

R b

n

MFI loans to NFC Total Loans to NFC

-100

-50

-

50

100

150

200

250

300

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

'06 2007 2008 2009 2010

EU

R b

n

MFI loans to NFC OFI loans to NFC NFC Loans to NFC

ROW Loans to NFC Total Loans to NFC

-100

-50

-

50

100

150

200

250

300

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

'06 2007 2008 2009 2010

EU

R b

n

-4.0

-3.0

-2.0

-1.0

-

1.0

2.0

3.0

Q o

n Q

perc

en

tag

e g

row

th

MFI loans to NFC OFI loans to NFC NFC Loans to NFC

ROW Loans to NFC NFV Value Added Grow th Total Loans to NFC

10

Non-financial assets

• Methodology developed by EAE; integrated in EAA quarterly production process

• Scope (covers both, gross and net of depreciation)

– Non-financial produced assets by type for total economy (dwellings, other buildings and structures, machinery and equipment, other produced assets)

Non-financial produced assets by institutional sector

– Housing wealth (dwellings and residential land) for households.

• Methods and Sources

– Annual and quarterly estimates based on application of capital accumulation equations (equivalent to perpetual inventory method)

– Make use of available annual national data - (for retirement and depreciation rates and deflators).

– Quarterly HHs housing wealth

– Estimates at constant and current replacement prices (from 1999Q4)

11

Household wealth development

Growth of households’ net worth and contributions by type of wealth change (annual

percentage changes and percentage point contributions)

Source: EAA, ECB and Eurostat

• Growth of

households net

worth is

dominated by

Other Changes:

- OC in non-

financial asset:

mostly valuation

changes of

housing wealth

- OC in financial

assets: mostly

valuation

changes of

shares (including

mutual fund

shares)

• Transactions

relatively stable

-10

-5

0

5

10

15

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2005 2006 2007 2008 2009 2010

-10

-5

0

5

10

15

net acquisition of non-financial assets net acquisition of financial assets

net incurrence of liabilities (-) other changes in non-financial assets

other changes in financial assets growth in net worth

12

Seasonal Adjustment

Comprehensive seasonal adjustment - highly policy relevant!

• Non-financial accounts – Broad consistency with the macro economic aggregates

(i.e. total economy data)

– Horizontal consistency for individual instruments

• Financial Accounts – Individual series using notional stock indices

– Transactions using stock flow accounting identity

– Horizontal consistency remains to be achieved

• Except for who to whom! (loans and deposits)

• Quality currently assessed by internal users

13

GDP and households’ gross disposable

income Growth of GDP, growth of households’ gross disposable income and

contributions by income component annual percentage changes and percentage point contributions

Source: EAA, ECB and Eurostat

• Large decline in

GDP growth

• more stable

HH disposable

income !

• decline in:

- property income,

- operating surplus

and

mixed income)

• partly offset by:

- higher social

benefits, and

- lower taxes

GDP (current prices)

-5

-4

-3

-2

-1

0

1

2

3

4

5

6

7

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2005 2006 2007 2008 2009 2010

GDP (current prices)

-5

-4

-3

-2

-1

0

1

2

3

4

5

6

7

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2005 2006 2007 2008 2009 2010

-5

-4

-3

-2

-1

0

1

2

3

4

5

6

7

GDP (current prices) household gross disposable income

-5

-4

-3

-2

-1

0

1

2

3

4

5

6

7

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2005 2006 2007 2008 2009 2010

-5

-4

-3

-2

-1

0

1

2

3

4

5

6

7

compensation of employees net property income and other transfersgross operating surplus and mixed income taxes (-)net social benefits and contributions household gross disposable incomeGDP (current prices)

14

Country data dissemination

Of increased interest for monetary policy and

financial stability (European Systemic Risk Board)

purposes

– Quarterly Non Financial Accounts dissemination (Eurostat)

• HH savings rate

• HH Investment share

• NFC Profit Share (Gross Margin)

• NFC Investment Share

– Quarterly National Financial Accounts dissemination

• Public dissemination of main data excluding w2w details

15

EAA – Where to find?

ECB Website

Press releases

EAA – press release http://www.ecb.europa.eu/press/pr/stats/ffi/html/index.en.html

MOBU Tables

MOBU Tables in SDW http://sdw.ecb.europa.eu/reports.do?node=10000039

- ECB Statistical Pocket Book, Chapter 6

- Article

MOBU Article 2007 November http://www.ecb.europa.eu/pub/pdf/mobu/mb200711en.pdf

16

Euro Area Accounts

Thank you for your attention.

Any questions?