SDT: 35-07 KINGDOM OF TONGA NATIONAL ACCOUNTS STATISTICS 2001-02 TO 2009-10 May 2011 Statistics Department P.O. Box 149, Nuku alofa Government of Tonga Telephone: (676) 23-300 / 23-913 Email: dept@stats.gov.to Website: www.spc.int/prism/country/stats Price: T$25.00 1
Preface This Bulletin is the 7 th in the series to be published by the Statistics Department (SD), following the 6 th published in October 2010. Last year s bulletin published the annual Gross Domestic Product (GDP) for the years 2000-01 to 2008-09, while this one shows the annual figures for the years 2001-02 to 2009-10. Data for earlier years from 1993-94 to 2000-01 is available on the Department s website. These GDP estimates are revised annually when new information becomes available to the Department or when production figures are firmed up for some industries. The GDP estimates in this Bulletin used the base period of 2000-01 for constant prices, based on the results of Household Income and Expenditure Survey 2000-01 conducted by the SD during the years 2000 and 2001. Base year prices need to be up-dated periodically, at least once every 5 years. The next National Accounts publication will update the base year, using data from Household Income and Expenditure Survey 2009 and the CPI which has been rebased to October 2010. In January 2011, the SD was very fortunate to welcome Ms. Anne McAllister, an Economic Statistics Advisor for two years funded by the AusAID. As her first task, she worked together with the new head of National Accounts (NA) Division for the preparation of this year s GDP estimates as published in this Bulletin. They took over NA from the GS who was also in-charge of this division for many years due to staff shortages. The arrival of Ms. McAllister coincided with the visit of Mr. Michael Andrews, a Statistics Advisor from the PFTAC office in Suva to provide support to economic statistics (particularly BOP & NA) prior to the annual visit of the IMF mission. Mr. Andrew s visit was for two weeks and he was able to share his past experiences in Tonga BOP and NA with Ms. McAllister. This Bulletin therefore, brings to fruition a concerted effort rendered by Michael Andrews, Anne McAllister, and staff members of the NA Division of the SD. The Department gratefully acknowledges their services, as well as contributions made by other staff members of the SD in supplying the most up-to date figures for these GDP estimates. The Department also wishes to thank the businesses and government departments that supplied data for use in this Bulletin. The Department welcomes any suggestions for the future improvement of the contents of this Bulletin. Please contact the Chief of the National Accounts Division, Statistics Department at this address: P.O. Box 149, Nuku alofa, Tonga or Telephone (676) 23-300, Fax (676) 24-303 or email: dept@stats.gov.to for any queries. Mr Ata ata Finau Government Statistician 2
Contents Preface...2 Contents...3 List of figures...4 List of statistical tables...5 Abbreviations...6 Introduction...7 General...7 Base-year prices, 2000-01 = 100...7 Highlights...8 Gross Domestic Product (GDP)...8 GDP per capita...9 Key national accounts aggregates...10 Savings and borrowing...10 Analysis of main aggregates...12 Goods and services account...12 GDP by industry...12 Primary sector...13 Industrial sector...14 Services sector...14 GDP by expenditure...16 Revisions to GDP...19 Table A: Reasons for revisions to GDP...20 Statistical discrepancy...21 Goods and services account...21 GDP...21 Statistics Department economic work programme 2010-12...21 Concepts in the national accounts...22 Gross domestic product...22 Gross national income...22 Gross national disposable income...22 The residency concept...23 Implications for Tonga s national accounts...23 Appendix 1: Statistical tables...24 3
List of figures Figure 1: GDP growth rates...8 Figure 2: Share of GDP(P) aggregates in current prices...9 Figure 3: GDP per capita...9 Figure 4: Key aggregates in current prices...10 Figure 5: Gross saving and net lending/borrowing in current prices...11 Figure 6: Main goods and services account aggregates in constant 2000-01 prices...12 Figure 7: GDP by main economic activity in constant 2000-01 prices...13 Figure 8: Primary sector GVA in constant 2000-01 prices...13 Figure 9: Industrial sector GVA in constant 2000-01 prices...14 Figure 10: Business services GVA in constant 2000-01 prices...15 Figure 11: Government and community services GVA in constant 2000-01 prices...15 Figure 12: Expenditure aggregates in constant 2000-01 prices...16 Figure 13: Final consumption expenditure in constant 2000-01 prices...17 Figure 14: Gross fixed capital formation in constant 2000-01 prices...17 Figure 15: External trade in goods and services in constant 2000-01 prices...18 Figure 16: Revisions to GDP...19 4
List of statistical tables Table 1: National accounts summary (T$ millions)...24 Table 2: Goods and services account at current prices (T$ millions)...25 Table 3: Goods and services account at constant 2000-01 prices (T$ millions)...25 Table 4: GDP at current prices by industry (T$ millions)...26 Table 5: GDP at constant 2000-01 prices by industry (T$ millions)...27 Table 6: GDP(P) implicit price deflators...28 Table 7: GDP at current prices by industry (annual change, percent)...29 Table 8: GDP at constant 2000-01 prices by industry (annual change, percent)...30 Table 9: GDP(P) implicit price deflators (annual change, percent)...31 Table 10: Contribution by industry to GDP at current prices...32 Table 11: Contribution by industry to GDP at constant 2000-01 prices...33 Table 12: Gross output at current prices by industry (T$ millions)...34 Table 13: Gross output at constant 2000-01 prices by industry (T$ millions)...35 Table 14: Gross output implicit price deflators...36 Table 15: GDP at current prices by expenditure share (T$ millions)...37 Table 16: GDP at constant 2000-01 prices by expenditure share (T$ millions)...38 Table 17: GDP(E) implicit price deflators...39 Table 18: GDP at current prices by expenditure share (annual change, percent)...39 Table 19: GDP at constant 2000-01 prices by expenditure share (annual change, percent)..40 Table 20: GDP(E) implicit price deflators (annual change, percent)...40 Table 21: Contribution of expenditure aggregates to GDP at current prices...41 Table 22: Contribution of expenditure aggregates to GDP at constant 2000-01 prices...42 Table 23: Key national accounts aggregates at current prices (T$ millions)...43 Table 24: Key national accounts aggregates at current prices (annual change, percent)...44 Table 25: Revisions to GDP at current prices (T$ millions)...45 Table 26: Revisions to GDP at constant 2000-01 prices (T$ millions)...45 5
Abbreviations BoP Balance of payments BPM6 Balance of Payments Manual Version 6 CPI Consumers price index c.i.f. Cost including insurance and freight FCE Final consumption expenditure f.o.b. Free on board GDP Gross domestic product GDP(E) GDP by expenditure GDP(P) GDP by production GFCF Gross fixed capital formation GNI Gross national income GNDI Gross national disposable income GVA Gross value added HIES Household Income and Expenditure Survey HFCE Household final consumption expenditure IMF International Monetary Fund IPD Implicit price deflator NA National Accounts NPISH Non-profit institutions serving households RSD Revenue Services Department SD Statistics Department VA Value added 6
Introduction General This report provides the provisional estimates of gross domestic product (GDP) for the fiscal years from 2001-02 to 2009-10. The estimates show GDP production (with growth rates, contribution to GDP, and implicit price deflators (IPDs) by industry) as well as expenditure on GDP. Other key aggregates such as GDP per capita, gross national income and gross national disposable income are also included. The National Accounts Division conducts a survey of selected large businesses in November each year to obtain up-to-date data for the GDP estimates. Additional information for previous years was also received that was not available for the 2008-09 estimates, therefore some industries have been revised accordingly. The external account (Balance of Payments) for the fiscal years 2001-02 to 2009-10 was used to derive other national accounts aggregates, such as the external trade components in the expenditure measure of GDP and gross national income. The National Accounts, vis-à-vis GDP estimates, has a long history in Tonga back to 1969-70 before the Statistics Section of the Ministry of Finance became a department in July 1975. As a result, the Statistics Department (SD) has a long series of GDP from 1969-70 to 1992-93 (unpublished), as well as estimates from 1993-94 to 2009-10 published on the SD website. Early GDP estimates were compiled by an expert from the Commonwealth Secretariat in London. After the Commonwealth Secretariat assistance, the SD with the assistance from the Regional Agency, continued with the estimation of GDP. In recent years, technical advice has been provided by Zia Abbasi and Michael Andrews from the Pacific Financial Technical Assistance Centre (PFTAC), a branch of the IMF located in Suva. A resident economic statistics advisor was appointed to the SD in January 2011 for a two year period, funded by AusAID. The advisor, Anne McAllister, will assist the SD with developing new sources and methods for GDP, and provide training for SD staff and staff in other administrative agencies who compile and use macroeconomic statistics. Base-year prices, 2000-01 = 100 Real GDP is expressed in the base-year prices for 2000-01. The purpose of GDP revaluation by base-year prices (real GDP) is to eliminate the effects of price changes/inflation in time series of GDP, so that changes in the series represent the changes in the physical volume of goods and services. Inter-temporal comparisons of GDP or other related figures should be measured in real prices. Base year prices need to be up-dated periodically, at least once every five years. The next National Accounts publication will update the base year, using data from Household Income and Expenditure Survey 2009 and the CPI which has been rebased to October 2010. 7
Percentage change Statistical analysis The latest national accounts estimates for 2001-02 to 2009-10 are analyzed in this section of the bulletin. Estimates for 2009-10 are provisional and estimates for earlier years have been revised. The analysis focuses on real growth in constant 2000-01 prices, unless stated otherwise. The detailed estimates for 2001-02 to 2009-10 are presented in the statistical tables in Appendix 1. Data for 1993-94 to 2009-10 is available in the spreadsheets on the SD website at http://www.spc.int/prism/country/to/stats/. A draft sources and methods document is available on request from the SD by emailing dept@stats.gov.to. Highlights Gross Domestic Product (GDP) Tonga s GDP rose by 0.3 percent in 2009-10, after a decline of 1.0 percent in 2008-09. Annual real GDP growth has fluctuated since 2003-04, and between 2003-04 and 2009-10, the economy has grown only 0.3 percent, an average of 0.05 percent per year. The estimated level of nominal GDP for 2009-10 was T$671.9 million in current prices, up 3.4 percent compared to the revised 2008-09 estimate. Nominal GDP growth has averaged 6.8 percent per annum since 2001-02. Figure 1: GDP growth rates 20 15 10 5 0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 -5 Constant 2000-01 prices Current prices In constant 2000-01 prices, market gross value added (GVA) decreased by 0.4 percent from T$ 233.8 million in 2008-09 to T$232.9 million in 2009-10. Non-market GVA also declined (by 0.3 percent) from T$102.3 million to T$102.0 million, over the same period. Other items, namely a 8
T$ Percent small increase in net indirect taxes and a fall in imputed bank service charges, contributed to the 0.3 percent rise in GDP. Figure 2: Share of GDP(P) aggregates in current prices 70 60 50 40 30 20 10 0-10 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Market Non-market Bank service charges Taxes less subsidies on products As a share of current price GDP, non-market GVA has remained reasonably constant since 2001-02, at around 26 percent of GDP. Indirect taxes less subsidies on products have declined as a percentage of GDP since the restructuring of Tonga s tax system in 2008, and in 2008-09 and 2009-10 contributed to 13 percent of GDP. The share of market GVA has returned to 2001-02 levels, at around 63 percent of GDP. GDP per capita Figure 3: GDP per capita 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Current prices Constant 2000-01 prices Estimated annual GDP per capita in 2009-10 in current prices was T$6,505, up 2.9 percent compared to T$6,320 in 2008-09. In real terms, annual GDP per capita declined marginally from T$3,675 in 2008-09 to T$3,672 in 2009-10. Real growth in GDP per capita has averaged 0.1 9
T$ millions percent per annum since 2001-02. Population growth over the same period averaged 0.4 percent per annum. Key national accounts aggregates Estimates for gross national income (GNI) and gross national disposable income (GNDI) have been revised for all years, due to the inclusion of updated Balance of Payments data. For definitions of GNI and GNDI please read the section Concepts in the national accounts later in this bulletin. Nominal GDP increased 3.4 percent to an estimated T$671.9 million in 2009-10, compared to an increase of 2.4 percent in GNI to T$679.6 million. GNDI, which measures the income available to Tonga s residents for current consumption or saving, increased by 1.8 percent to T$863.6 million. The lower growth rates for GNI and GNDI are mainly due to higher flows of investment income and current transfers to the rest of the world in 2009-10. Current transfers from the rest of the world dropped from a high of T$228.8 million in 2007-08 to T$205.9 million in 2008-09, and rose again slightly to T$210.9 million in 2009-10. Figure 4: Key aggregates in current prices 1,000 800 600 400 200 0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Gross domestic product Gross national income Gross national disposable income Savings and borrowing The 2010 National Accounts publication included experimental estimates for saving, changes in net worth due to saving and capital transfers, and net lending/borrowing. These series remain experimental, and the SD welcomes comments from users about their usefulness. The statistics described in this section are expressed in current prices. Gross savings rose 3.6 percent to T$70.0 million in 2009-10, after falling by 26.3 percent (T$24.1 million) in 2008-09. Inflows of capital from the rest of the world in 2008-09 and 2009-10 have 10
T$ millions contributed to an increase in Tonga s net worth, which currently stands at T$197.3 million. In 2009-10, after deducting gross fixed capital formation, net borrowing was T$1.1 million, a reversal from a net lending position of T$27.1 million in 2008-09. Figure 5: Gross saving and net lending/borrowing in current prices 120 100 80 60 40 20 0-20 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 -40-60 Gross saving Net lending/borrowing 11
T$ millions Analysis of main aggregates Goods and services account In 2009-10, gross output in basic prices decreased 1.7 percent in constant 2000-01 prices to T$552.5 million. Intermediate consumption decreased by 4.3 percent to T$223.0 million. Final consumption expenditure also decreased, by 1.1 percent, to T$405.3 million, while gross fixed capital formation (including inventories) increased by 11.0 percent to T$108.5 million for the year. Imports of goods and services decreased by 2.8 percent to T$202.4 million, and exports of goods and services decreased by 4.7 percent, down to T$58.5 million. Figure 6: Main goods and services account aggregates in constant 2000-01 prices 600 500 400 300 200 100 0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Output at basic prices Imports of goods and services Intermediate consumption Final consumption expenditure Gross fixed capital formation Exports of goods and services GDP by industry The primary sector fell 3.1 percent in real terms in 2009-10, due to decreases in exports of fruit and vegetables, and fish, following a decline of 1.7 percent in 2008-09. The industrial sector declined by 0.5 percent in 2009-10, with falls in all industries except construction. The services sector increased by 0.9 percent, following a decline of 1.9 percent in 2008-09. 12
T$ millions T$ millions Figure 7: GDP by main economic activity in constant 2000-01 prices 250 200 150 100 50 0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Year Primary sector Industrial sector Services sector Taxes less bank charges and subsidies The services sector share of GDP (as measured in current prices) has risen from 51.4 percent of GDP in 2001-02 to 55.9 percent of GDP in 2009-10. Over the same period, the industrial sector s share of GDP has declined; from 18.2 percent in 2001-02 to 15.6 percent in 2009-10. The agriculture sector s share of GDP also declined slightly, from 19.7 percent in 2001-02 to 17.8 percent in 2009-10. Taxes on products as a percentage of GDP increased steadily between 2001-02 and 2007-08, from 14.1 percent to 17.0 percent of GDP, but after Government taxation changes have fallen to 12.9 percent of GDP in 2009-10. Primary sector Agriculture industry GVA in 2009-10 decreased by 3.4 percent in constant 2000-01 prices, following a nil change in the previous year. The fall was due to reported declines in exports of root crops. Fishing GVA declined by 2.4 percent, following falls of 7.3 percent in 2008-09 and 4.4 percent in 2007-08. Forestry GVA increased by 0.4 percent. Figure 8: Primary sector GVA in constant 2000-01 prices 50 40 30 20 10 0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Agriculture Forestry Fishing 13
T$ millions Industrial sector The industrial sector declined by 0.5 percent in 2009-10, with falls in all industries except construction. Electricity and water supply GVA declined by 4.1 percent, following a decline of 4.7 percent in 2008-09, due to lower levels of electricity generation in those two years. Manufacturing GVA declined by 0.7 percent, following growth of 6.4 percent in 2008-09. Mining and quarrying output reported by companies in the GDP survey declined in 2009-10, which resulted in a fall in GVA of 21.5 percent. Mining and quarrying activity is expected to pick up in 2010-11 with companies supplying materials for the major roading projects. Construction activity rose by 1.9 percent in 2009-10, after decreasing by 1.7 percent in 2008-09. Figure 9: Industrial sector GVA in constant 2000-01 prices 40 30 20 10 0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Mining and quarrying Manufacturing Electricity and water supply Construction Services sector Business sector performance was mixed in 2009-10, with increases in trade and communications offsetting falls in other industries. Communications GVA rose by 6.0 percent, after declining by 5.4 percent in 2008-09. Trade GVA increased by 0.4 percent. Declines in tourist arrivals partially contributed to falls in hotels and restaurant activity, which declined by 3.2 percent, and transport and storage, which fell by 5.7 percent. Financial intermediation also declined, by 2.5 percent, following a drop of 20.4 percent in 2008-09. Finance estimates for 2006-07 to 2008-09 have been revised, with the receipt of actual data from GDP survey respondents. 14
T$ millions T$ millions Figure 10: Business services GVA in constant 2000-01 prices 40 30 20 10 0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Trade Transport and storage Financial intermediation Hotels and restaurants Communications Real estate, renting and business services In 2009-10, GVA for public administration and services increased 0.9 percent in constant 2000-01 prices, following a revised increase of 2.5 percent the previous year. Education services GVA rose 8.0 percent in 2009-10 compared to a fall of 13.3 percent in the previous year. Health and social work increased 4.6 percent, after a decline of 7.7 percent in 2008-09. Recreational, cultural and sporting activities grew by 4.4 percent, following a 9.7 percent increase the year before. Other community and personal services GVA increased by 5.1 percent compared to a decrease of 5.6 percent in 2008-09. Ownership of dwellings GVA increased 1.3 percent in 2009-10, after an increase of 1.2 percent for the previous year. Figure 11: Government and community services GVA in constant 2000-01 prices 50 40 30 20 10 0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Public administration and services Health and social work Other community and personal services Education Recreational, cultural and sporting activities Ownership of dwellings 15
T$ millions GDP by expenditure Annual growth in the Tongan economy is measured using the production approach, GDP by industry, as it generally considered a more reliable measure than the expenditure approach, GDP by expenditure share. Nevertheless, GDP(E) estimates are a useful cross-check to ensure consistency of the GDP(P) estimates. In constant 2000-01 prices, GDP(E) estimates for 2008-09 and 2009-10 were T$ 360.4 million and T$ 369.8 million respectively, compared to the GDP(P) estimates of T$ 378.1 million and T$ 379.3 million for the same years. While the growth rates are different, the overall level of GDP for both measures is similar. Figure 12: Expenditure aggregates in constant 2000-01 prices 450 400 350 300 250 200 150 100 50 0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Final consumption expenditure Gross fixed capital formation Change in inventories Exports of goods and services Imports of goods and services In 2000-01 prices, final consumption expenditure (FCE) decreased by 1.1 percent from T$409.7 million in 2008-09 to T$ 405.3 million in 2009-10. Gross fixed capital formation (GFCF) declined by 2.9 percent, however the unfinished Nuku alofa CBD construction projects are measured in changes in inventories as work in progress. The two combined, i.e. GFCF plus inventories, increased by 9.9 percent in 2009-10. Exports of goods and services fell 4.7 percent, following a decline of 3.5 percent in 2008-09. Imports of goods and services declined by 2.8 percent, after rising by 2.9 percent the previous year. 16
T$ millions T$ millions Figure 13: Final consumption expenditure in constant 2000-01 prices 350 300 250 200 150 100 50 0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Households Non profit institutions serving households Government Household final consumption expenditure decreased by 1.1 percent in 2009-10, after a decline of 0.9 percent in 2008-09. Expenditure by non-profit institutions serving households (NPISHs) increased by 8.9 percent, partly due to a pick-up in overseas remittances. Expenditure by NPISHs had been falling since 2006-07. Government final consumption expenditure declined by 6.7 percent, after rising by 5.6 percent in 2007/08 and 1.7 percent in 2008-09. Figure 14: Gross fixed capital formation in constant 2000-01 prices 70 60 50 40 30 20 10 0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Construction Durable equipment Inventories Expenditure on durable equipment for GFCF rose by 12.5 percent in 2009-10, compared with a decline of 9.3 percent in 2008-09. Construction GFCF plus change in inventories increased by 9.9 percent in 2009-10. GFCF is expected further expand in the coming years due to investment in new buildings and roads, funded through loans and donor commitments. 17
T$ millions Figure 15: External trade in goods and services in constant 2000-01 prices 180 160 140 120 100 80 60 40 20 0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Goods exports Services exports Goods imports Services imports Data for exports and imports is sourced from the Balance of Payments (BoP) statistics. BoP statistics have been revised since the last publication and are now measured according the revised Balance of Payments Manual Version 6. Merchandise trade data is used in the BoP and national accounts, and some adjustments are made for undercoverage where alternative credible data is available. The SD believes that agriculture and fishing exports are being under-reported in merchandise trade data. We will examine alternative data sources, for example MAFF Quarantine Office records, and expect to revise the merchandise trade estimates in next year s National Accounts and Balance of Payments releases. Since the last National Accounts publication, goods exports have declined again in 2009-10, by 28.2 percent, after falls of 17.4 percent in 2008-09 and 5.9 percent in 2007-08. Services exports rose for the third consecutive year, up by 6.9 percent from 2008-09. This rise follows increases of 18.1 percent in 2007-08 and 5.4 percent in 2008-09. Goods imports increased modestly, by 0.7 percent in 2009-10 and 0.8 percent in 2008-09. Services imports fell 13.4 percent following a increase of 9.9 percent in the previous year. 18
Percent of GDP Revisions to GDP A number of minor revisions have been made to GDP aggregates back to 2000-01, due to changes in methodology and the receipt of updated data from government agencies, businesses and other sources. Figure 16 shows the size of the revisions as a percentage of the level of GDP, in current prices and in constant prices. The reasons for revisions are shown in the following table. Figure 16: Revisions to GDP 0.6 0.4 0.2 0.0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 -0.2-0.4 Current prices Constant prices 19
Table A: Reasons for revisions to GDP Component Years revised Reason for revision Agriculture 2008-09 Change in assumption for market sales Mining and quarrying 2007-08, 2008-09 Revised data from GDP survey Manufacturing 2006-07 2008-09 Informal sector revised due to revised tourist arrivals and HFCE IPD changes Electricity and water 2007-08, 2008-09 Revised data from GDP survey Construction 2006-07 2008-09 Inclusion of donor funded projects in Government sector, revised data from GDP survey Trade 2000-01 2008-09 Exports and imports revised due to introduction of BPM6. Adjustment to 2008/9 GVA to account for fall in sales tax. Hotels and restaurants 2000-01 2008-09 BPM6 changes to tourist expenditure Transport 2000-01 2008-09 BPM6 changes, revised data from GDP survey Communications 2008-09 Revised data from GDP survey Finance and insurance services Real estate, renting and business services Public administration and government services Education, health, recreation, other community and personal services 2005-06 2008-09 Revised data from GDP survey 2000-01 2008-09 Other industry revisions (method uses composite of other industries) 2008-09 Revised data from Ministry of Finance 2000-01 2008-09 BPM6 changes to remittances Ownership of dwellings 2005-06 2008-09 Revised data from GDP survey Imputed bank services charge 2005-06 2008-09 Revised data from GDP survey Household FCE 2003-04 2008-09 Imports revised due to introduction of BPM6 NPISH 2006-07 2008-09 BPM6 changes to remittances Government FCE 2008-09 Revised data from Ministry of Finance Construction GFCF Inclusion of donor funded projects in Government sector, revised data from GDP survey Inventories 2000-01 2008-09 Methodology change, stock building ratio now assumed to be constant Exports and imports BPM6 changes 20
Statistical discrepancy Goods and services account The statistical discrepancy for the goods and services account in current prices, measured as a percentage of the average of total resources and uses, is well within the target of less than +/- 1.0 percent. The discrepancy averaged 0.6 percent over the years 2001-02 to 2009-10. In 2009-10, the discrepancy was +0.43 percent. In constant 2000-01 prices, the discrepancy averaged 1.0 percent, towards the upper limit of what is considered acceptable. For 2009-10, the discrepancy was +1.2 percent. GDP The target for the discrepancy between the production and expenditure measures of GDP is +/- 2.0 percent. For nominal GDP, the discrepancy averaged 1.3 percent over the years 2001-02 to 2009-10. For 2009-10, the discrepancy was +0.9 percent. For real GDP, the discrepancy averaged 2.1 percent; and for 2009-10 it was 2.5 percent. Again, the discrepancy in constant 2000-01 prices is above the acceptable limit. The reasons for the variance will be examined during the revisions exercise. Statistics Department economic work programme 2010-12 Revisions to national accounts methodology and data sources will be considered over the next two years. A more comprehensive survey of large establishments will be conducted to collect new benchmarks for value added ratios. The SD will also examine ways to use more data from business tax returns submitted to Revenue Services. In addition, household final consumption expenditure and agriculture production will be updated using the results from the HIES 2009. The constant price base year should be updated from time to time, and this will be updated to 2010-11. 21
Concepts in the national accounts This section provides an explanation of some national accounting concepts to help users interpret the data presented in this bulletin. GDP vs GNI vs GNDI Gross domestic product Gross domestic product (GDP) is the most frequently used indicator in the national accounts. It lies at the heart of the entire system of national accounts. GDP combines in a single figure, and with no double counting, all the output (or production) carried out by all resident producer units within the country s economic territory 1. There are three ways to measure GDP: 1. The production measure, which is the sum of the gross value added of all resident institutional units engaged in production (plus any taxes, and minus any subsidies, on products not included in the value of their outputs) 2. The expenditure measure, which is the sum of the final uses of goods and services (all uses except intermediate consumption) measured in purchasers prices, less the value of imports of goods and services, and 3. The income measure, which is the sum of primary incomes distributed by resident producer units (not currently available in Tonga s national accounts). Gross national income The term domestic contrasts with national, as in gross national income (GNI), previously known as Gross National Product (GNP). GDP measures the total production occurring within the territory, while GNI measures the total income (excluding capital gains and losses) of all economic agents residing within the territory (households, firms and government institutions). Residents are defined based on their centre of economic interest. To convert GDP into GNI, it is necessary to add the income received by resident units from abroad and deduct the income created by production in the country but transferred to units residing abroad. Gross national disposable income All GNI is not available for final uses domestically since some of it is transferred to other countries without anything being received in exchange, such as money sent to support dependants living in another country. Such transfers are called current transfers, and taking them into account leads to the concept of gross national disposable income (GNDI). GNDI is derived by adding to 1 A country s economic territory is the geographic area corresponding to the nation state. 22
GNI, all current transfers (except social transfers in kind) receivable by that unit or sector and subtracting all current transfers (except social transfers in kind) payable by that unit or sector. In summary: Gross domestic product (GDP) = the sum of production in the economy Gross national income (GNI) = GDP + net income from abroad Gross national disposable Income (GNDI) = GNI + net current transfers The residency concept The concept of residence is associated with that of economic territory in the national accounts. A unit is said to be resident in a country when its centre of economic interest is situated in that country s economic territory. This is usually taken to mean that the unit has carried out economic activity there for more than one year. Most firms, including unincorporated enterprises that have an activity in the territory, are regarded as resident. Actual or intended location for one year or more is used as an operational definition. While the choice of one year as a specific period is somewhat arbitrary, it is adopted to avoid uncertainty and facilitate international consistency. Implications for Tonga s national accounts The reconstruction of Nuku alofa s central business district after the fires in November 2006 is taking place with the assistance of a loan from China s EXIM bank. The Chinese Government is also funding Tonga s National Roads improvement project. Several of the reconstruction projects are being carried out by Chinese-owned companies. Because the construction activities are taking place over a number of years, the Chinese companies are considered resident for national accounts purposes, and all construction activity is included in the GDP statistics. The GDP production account measures the construction value added as: total output less intermediate consumption (the goods and services used in the production of the output). The assets produced are counted in the expenditure measure of GDP. The completed assets are included in the country s gross fixed capital formation. Work in progress is included in the inventories component and is transferred into gross fixed capital formation upon completion. The imported materials used in the construction are deducted from the expenditure measure. 23
Appendix 1: Statistical tables Table 1: National accounts summary (T$ millions) At Current Prices: Aggregate 2001-02r 2002-03r 2003-04r 2004-05r 2005-06r 2006-07r 2007-08r 2008-09r 2009-10p Gross Domestic Product (GDP) 397.0 444.4 470.3 503.3 592.5 611.0 661.5 650.1 671.9 Of which: Market 248.5 276.6 299.5 313.9 368.5 369.6 401.2 407.4 424.3 Non-market 101.7 111.9 118.9 128.9 146.6 160.7 165.0 172.0 175.5 Less imputed bank service charges 9.0 9.9 11.9 11.9 12.7 15.0 15.6 14.3 12.2 Taxes less subsidies on products 55.7 65.9 63.8 72.3 90.2 95.7 110.9 85.1 84.3 Plus Net Income from Abroad 7.4 4.1 6.1 (0.2) 10.4 14.4 14.3 13.4 7.6 Gross National Income (GNI) 404.4 448.5 476.4 503.1 602.9 625.3 675.7 663.5 679.6 Plus Net Current Transfers 122.8 127.1 143.7 154.1 170.4 181.7 200.3 184.5 184.1 Gross Disposable Income (GDI) 527.2 575.5 620.1 657.3 773.3 807.1 876.0 848.0 863.6 In US Dollars: GDP in US$ millions 177.5 198.5 225.7 254.7 288.2 296.2 338.5 307.7 347.8 GNI in US$ millions 180.8 200.3 228.7 254.6 293.3 303.2 345.8 314.0 351.7 GDI in US$ millions 235.8 257.0 297.6 332.6 376.1 391.3 448.3 401.4 447.0 Per capita: GDP per capita - $T 3,972 4,428 4,667 4,974 5,832 5,988 6,457 6,320 6,505 GDP per capita - $US 1,776 1,978 2,240 2,517 2,837 2,903 3,304 2,991 3,367 GNI per capita - $T 4,046 4,469 4,728 4,972 5,934 6,129 6,596 6,450 6,579 GNI per capita - $US 1,809 1,996 2,269 2,516 2,886 2,972 3,375 3,053 3,405 At Constant 2000-01 Prices: Gross Domestic Product (GDP) 365.2 374.2 378.1 375.1 375.6 372.2 381.8 378.1 379.3 Of which: Market 231.6 237.6 242.3 237.9 237.1 232.9 237.9 233.8 232.9 Non-market 94.8 96.0 95.8 96.5 97.9 99.4 102.2 102.3 102.0 Less imputed bank service charges 8.2 8.2 8.8 7.9 7.9 8.9 8.4 7.4 6.2 Taxes less subsidies on products 47.0 48.9 48.8 48.5 48.4 48.7 50.2 49.3 49.8 Per capita: Real GDP per capita - $T 3,654 3,729 3,752 3,707 3,696 3,648 3,727 3,675 3,672 GDP per capita - $US 1,634 1,665 1,801 1,875 1,798 1,769 1,907 1,740 1,901 Exchange rate $US/$T 0.447 0.447 0.480 0.506 0.486 0.485 0.512 0.473 0.518 Population (persons) 99,946 100,358 100,772 101,188 101,606 102,025 102,446 102,869 103,293 24
Table 2: Goods and services account at current prices (T$ millions) Table 3: Goods and services account at constant 2000-01 prices (T$ millions) 25
Table 4: GDP at current prices by industry (T$ millions) 26
Table 5: GDP at constant 2000-01 prices by industry (T$ millions) 27
Table 6: GDP(P) implicit price deflators 28
Table 7: GDP at current prices by industry (annual change, percent) 29
Table 8: GDP at constant 2000-01 prices by industry (annual change, percent) 30
Table 9: GDP(P) implicit price deflators (annual change, percent) 31
Table 10: Contribution by industry to GDP at current prices 32
Table 11: Contribution by industry to GDP at constant 2000-01 prices 33
Table 12: Gross output at current prices by industry (T$ millions) 34
Table 13: Gross output at constant 2000-01 prices by industry (T$ millions) 35
Table 14: Gross output implicit price deflators 36
Table 15: GDP at current prices by expenditure share (T$ millions) 37
Table 16: GDP at constant 2000-01 prices by expenditure share (T$ millions) 38
Table 17: GDP(E) implicit price deflators Table 18: GDP at current prices by expenditure share (annual change, percent) 39
Table 19: GDP at constant 2000-01 prices by expenditure share (annual change, percent) Table 20: GDP(E) implicit price deflators (annual change, percent) 40
Table 21: Contribution of expenditure aggregates to GDP at current prices 41
Table 22: Contribution of expenditure aggregates to GDP at constant 2000-01 prices 42
Table 23: Key national accounts aggregates at current prices (T$ millions) 43
Table 24: Key national accounts aggregates at current prices (annual change, percent) 44
Table 25: Revisions to GDP at current prices (T$ millions) Table 26: Revisions to GDP at constant 2000-01 prices (T$ millions) 45