National accounts

 

The System of National Accounts (SNA) is a system of indicators providing coherent and consecutive descriptions of fundamental economic processes and events: production, income, consumption, capital formation and finance.

The State Statistics Service compiles the national accounts in line with the SNA standard adopted by international organisations in 2008.

According to the international SNA standard the institutional units are grouped into five sectors:

non-financial corporations refer to the institutional units involved in marketable production of marketable goods and services for sale at prices covering the production costs and providing a surplus;

financial corporations are the institutional units specializing in financial intermediation (banks, insurance companies, etc);

general government incorporates the central and local governments, non-profit public sector entities and State earmarked funds;

household sector covers the natural persons both as consumers and in some cases as unincorporated businesses;

non-profit institutions sector serving households (NPISH) refer to the institutional units set up by selected groups of households to satisfy their political, religious and professional interests, and also to render social and cultural services on a non market basis.

The SNA reflects the economy development at various stages of the production process, it shows the movements of goods and services, and also production and use of gross domestic product (gross value added).

The production stage is characterised by output, intermediate consumption, gross domestic product (gross value added).

Output is the value of goods and services resulting from the production activity of resident units over the reference period.

Intermediate consumption is the expenditure for goods and services used by the institutional units for production their activities.

Gross value added (GVA) is compiled as the difference between output and intermediate consumption. It includes the primary income generated by producers and distributed among them.

The national accounts use two data levels and two estimation methods. For the economy as a whole, the results are measured by the output of goods and services and gross domestic product at market prices, while for the sectors and types of economic activities by output at basic prices and gross value added.

Gross domestic product (GDP) at the production stage is defined as the difference between output at market prices and intermediate consumption valued at prices of consumers. It is also the total of gross values added by type of economic activity and taxes on products less subsidies on products. Since 2010, the estimates of the GVA have been compiled by type of economic activity according to the Classification of Types of Economic Activity (State Classifier 009:2010).

Taxes on products include taxes whose value directly depends on the amounts and values of goods and services produced, sold or imported by a productive unit.

Subsidies on products are reimbursement from the Central budget to the enterprises in the procedure of the state regulation of prices for agricultural and other production to cover the current losses of enterprises, improvements of their financial situations by renewal of working capital or compensation for selected expenditure.

Income generation at the level of the GDP is characterised by the following indicators:  labour remuneration of employees, taxes and subsidies on production and imports (at the level of the  gross value added by other taxes

and subsidies associated with the production) and the gross (net) profit.

Labour remuneration of employees includes wages and salaries, actual and conventional contributions to the social security done by employers and estimated on the basis of the accrued sums. Wages and salaries are remuneration in cash or in kind which should be paid by the resident employer to an employee for the work he has done over the reference period, regardless of whether this employee is resident or not.

Taxes on production and imports include taxes on products and other taxes connected with the production, while the subsidies on production and imports include the subsidies on products and other subsidies connected with the production.

Other taxes connected with the production include enterprises’ payments to the Central and local budgets, state earmarked funds in connection with the uses of resources and getting permits for the concrete types of activity.

Other subsidies connected with the production belong to those that are provided to carry out a certain economic and social policies regarding the uses of resources.

Gross (net) operating surplus is an indicator that characterises the excess of income over expenditure that enterprises have as a result of the production. For the sector of households, this called mixed income. The net operating surplus is defined by excluding consumption of fixed capital from the gross operating surplus.

At the stage of use, GDP is estimated as a sum of final consumption of goods and services, gross capital formation, exports/imports balance of goods and services.

 

Final consumption of goods and services consists of expenditure of households for their own final consumption, expenses of general government to meet individual and collective needs of the society. It is also includes expenditure for individual final consumption of non-profit organisations that is serving households.

Gross capital formation is estimated as the sum of the gross fixed capital formation, changes in inventories and the purchase less disposal of valuables.

The exports/imports balance of goods and services is defined as a difference between exports and imports of goods and services.

The input-output table at consumers’ prices is compiled according to the SNA. It gives a comprehensive picture of the processes characterising production and relationships between the types of the economic activity. Input-output table uses the indicators identical with the system of national accounts and methodology for their estimation. The table shows the production links between the types of economic activities, the value structure of the gross domestic product and its use for the final consumption and the gross capital formation.

The flows and amounts of structured changes in the economy of Ukraine’s regions are characterised by the Gross regional product (GRP) that is general indicator of the economic development of the region. The definition of the indicator is based on the production method. The region’s GRP is comprised of the sum of the gross values added in all types of economic activity, adjusted by the value of indirectly measured services of financial intermediation and taxes less subsidies on products.