GDP, output and expenditures; value, Quarterly National Accounts

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Description topics

Expenditure approach to GDP

The way GDP is formed by underlying components in the so-called expenditure approach. In this approach the components are consumption by households, consumption by the general government, gross fixed capital formation, changes in inventories and exports, minus imports. Changes in inventories are included for consistency with the production approach. From the 2010 edition of the European System of Accounts onwards these changes are added to fixed capital formation. Consumption, fixed capital formation and changes in inventories add up to the so-called national final expenditure. By adding exports final expenditure is obtained. Intermediate consumption, goods and services used upon production, is not part of final expenditure.

Final expenditure

The sum of the National final expenditure and the exports of goods and services. This variable is by definition equal to the disposable final expenditure (GDP and imports).

National final expenditure

The sum of the consumption of households and the government, gross fixed capital formation and changes in inventories.

Total

Changes in inventories incl. valuables

Changes in inventories including acquisitions less disposals of valuables
Changes in the stock of raw materials, semi-finished products, work-in-progress (unfinished works like ships or oil rigs) and finished products still held by the producer. Changes in stock do not include progress made in construction. Positive changes in inventories arise when products are finished in the reference period but not yet sold. Alternatively, they arise when goods are purchased for intermediate consumption but not yet used. Negative changes in inventories arise when goods from stocks have been sold, or used in the production process. A more extensive list of changes in inventories is found in article 3.146 and further of the European System of Accounts 2010.

In measuring changes in inventories, changes in prices during the reference period are not allowed to have any effect. The initial and final inventory is therefor valued at the same price. Raw materials are valued at the price of purchase. Final products are valued at the selling price. Work-in-progress is valued at the cost-price.

Acquisitions less disposals of valuables This transaction consists of the acquisitions less disposals of precious stones, non-monetary gold, antiques, art objects and jewelry, that are acquired and held primarily as stores of value. In the national accounts this transaction is mostly combined with changes in inventories.

National net lending or net borrowing

The calculation of the national net lending or net borrowing starting with gross domestic product (GDP). The national financing balance (net lending or net borrowing) is the balance of resources and expenditure on the current account and the capital account of the joint domestic sectors. In the financial account the balance gives the amount new loans are entered into with financial assets abroad and/or are sold (at a deficit) or for any amount to be repaid debts abroad and/or financial assets are purchased (at a surplus). In theory net lending or borrowing equals the change in assets less liabilities. In practice a statistical difference between the two remains.

Surplus of the nation on income approach

The approach of net lending or net borrowing through the surplus of national income.

Gross national income

Total primary income received by resident institutional units: compensation of employees, net operating surplus / mixed income, net property income and net taxes on production and imports less subsidies. Incomes flowing from one domestic sector to another have no effect on net national income. Gross national income (at market prices) equals GDP minus primary income payed by resident institutional units to non-resident institutional units plus primary income received by resident institutional units from the rest of the world. The division of payments by member states to the European Union is largely based upon differences in gross national income.

National income is not a production concept but an income concept, which is more significant if expressed in net terms, i.e. after deduction of depreciation (consumption of fixed capital).

Gross disposable national income

The sum of the gross disposable incomes of the institutional sectors. Gross national disposable income equals gross national income (at market prices) minus current transfers (current taxes on income, wealth et cetera, social contributions, social benefits and other current transfers) payed to non-resident units, plus current transfers received by resident units from the rest of the world. Because disposable national income is not a production concept but an income concept, it is usually expressed in net terms, i.e. after deduction of depreciation (consumption of fixed capital).

Gross national savings

The portion of national disposable income that has not been used for final consumption expenditure. This equals is the sum of the net savings of the various institutional sectors. It is usually expressed in net terms, i.e. after deduction of depreciation (consumption of fixed capital).

Acq. less disposals of non-prod. assets

Acquisitions less disposals of non-produced non-financial assets mainly consist of sales of land by public (municipal) development corporations to investors in dwellings and non-residential buildings. The valuation of sales and purchases of land is exclusive of VAT and transfer costs. These are included in fixed capital formation.

National net lending or net borrowing

The national financing balance (net lending or net borrowing) is the balance of resources and expenditure on the current account and the capital account of the joint domestic sectors. In the financial account the balance gives the amount new loans are entered into with financial assets abroad and/or are sold (at a deficit) or for any amount to be repaid debts abroad and/or financial assets are purchased (at a surplus). In theory net lending or borrowing equals the change in assets less liabilities. In practice a statistical difference between the two remains.