Better insight in the economy through more frequent revisions

17/10/2014 15:00

Measuring the economy is one of the core tasks of Statistics Netherlands. This is done according to an agreed set of international guidelines and methods, assuring that the figures of the various countries are comparable. However, the economy is in a constant state of flux. New economic activities develop, other activities become less popular or even obsolete and disappear. This is why the international guidelines and methods are periodically adjusted to fit the new economic reality.

In 2013 new European guidelines were agreed and all EU countries have adapted their ways of measuring their economies. This is a legal obligation within Europe and is called a revision. To avoid a break in the time series, the figures of the previous years are also revised according to the new guidelines. In this way a new series is made with figures that are comparable over time. Nothing changes in the underlying economy during this process, but a revision is a crucial tool with which the ever changing economy can be adequately measured.

Statistics Netherlands published the revised results for reporting year 2010 on 6 March 2014 and the time series for 1995-2013in June andSeptember. The quarterly figures for 2014 are also based on the new international guidelines. With the publication of the results of the other member states, the Dutch results can now be compared with those of other European countries.

More emphasis on measuring ICT, globalisation, research and illegal activities

According to the new guidelines GDP (the size of the economy) is 3.0 percent greater than GDP according to the old guidelines. Major changes in the new guidelines are those for investments in research and development (R&D), military investments and international trade. Relatively new economic phenomena – such as developments in the ICT sector and advancing globalisation – are now fully included.For the Netherlands this means that GDP has become1.7 percent higher. The member states also had to implement existing guidelines for measuring illegal activities and valuing software developed in-house by the companiesthemselves. For the Netherlands this has led to an upward adjustment of 1.3 percent. So together with the previously mentioned 1.7 percent this led to a rise of GDP by 3.0 percent.

Higher quality and lower administrative burden dueto the use of new sources

Statistics Netherlands has greatly invested in getting access to new and improved electronic data files. The main development in this is the use of registerdata from various government bodies such as the taxauthorities and the chambers of commerce. This is how Statistics Netherlandssucceeded in substantially reducing the response burden for the business community while raising the quality level of the way the economy is measured. The currently used integral registerdata provide a more complete and up-to-date picture of the economy than the survey samples among enterprises did. With the registersStatistics Netherlands is better able to measure the contributions of self-employed people, whose numbers have increased rapidly in recent years. The growth in the ICTindustry can also be shown in more detail. There is also a more complete picture of the number of small companies, the salaries paid and the financial relation of the Netherlands with other countries.

Statistics Netherlands has opted not to confront its users with various revisions within a short space of time but implement a so called source revision at the same time the new international guidelineswere introduced. In a source revision, newly developed information about the sources in used in full for measuring the size of the economy. The effect of this is a ratherimpressive 4.6 percent. BecauseStatistics Netherlands opted to combine the new international guidelines with the application of the new sources, the total effect of the revision is relatively great. This is also the case in a number of other countries in the North-West of Europe, e.g. the United Kingdom, Ireland and Iceland.

The net effect of the previous budget deficit as a percentage of GDP turned out tobe modest. For 2010 the budget deficit changes from 5.1 percent to 5.0 percent of GDP. The government debt for 2010 was upwardly adjusted by 0.6 billion euros, which is due to the use of new source data. Because the adjustment of GDP is relatively great, the 2010 government debt was adjusted from 63.4 to 59.0 percent of GDP.

Statistics Netherlandscontinues to invest in improvement of its economic statistics

Although implementing revisions and improvements are inevitable and necessaryStatistics Netherlands is aware of the fact that the impact can be substantial, such as it is in this case. To improve the quality of the GDP measuring in the future Statistics Netherlands will increase the frequency of the revisions to once every five years, so that new source material can be included in measuring the size of the Dutch economy. There was a rather long time between the current and the previous revision of nine years. We assume that more frequent revisions will lead to smaller adjustments. New sources will be used in measuring the economic developments as soon as they become available, and as usual as far as possible. This is also in line with international developments. The publication of the results of the next revision is expected in 2019. In the meantimeStatistics Netherlands continues to improve the data sources and automation of processes together with the private and public sector, De Nederlandse Bank and the tax authorities, permanently raising accuracy and quality.