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5204.0 - Australian System of National Accounts, 2005-06  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 01/11/2006   
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FREQUENTLY ASKED QUESTIONS


Why do imports subtract from GDP?
What is the effect of rounding?
How can the Household saving ratio be negative?
Is economic activity measures for different regions of Australia?
What is an Implicit price deflator?
Can the Industry gross valued added data be provided at the 3 or 4-digt ANZSIC level?
Additional Information


Why do imports subtract from GDP?

GDP is the total market value of goods and services produced in Australia after deducting the cost of goods and services used (intermediate consumption) in the process of production, but before deducting allowances for the consumption of fixed capital (depreciation).

Many Imports are bought by businesses for use in their own productive activities (e.g. steel is bought by car manufacturers). If the value of all goods and services produced were simply added together there would be duplication because some goods and services would be added in several times at various stages of production.

As these intermediate goods and services contribute to the value of the final goods and services, it is necessary to subtract imports to avoid double-counting. In short, the subtraction of imports in the calculation of GDP does not mean that an increase in imports reduces GDP or that a decrease in imports increases it. It is simply an accounting relationship rather than an economic relationship.


What is the effect of rounding?

All values, unless otherwise indicated, are shown in Australian dollars rounded to the nearest million. Values in billions are of Australian dollars used in some tables refer to thousand of millions of Australian dollars. Where figures have been rounded, discrepancies may occur between the sums of the component items and totals.

How can the Household saving ratio be negative?

Household saving cannot be directly measured by the national accounts. Rather it is calculated as a residual item by deducting Final household consumption expenditure from Gross disposable income. So in any one period households can spend more than they earn. This can be done by increasing debt or drawing down assets. However, the Household saving ratio does not take into account the assets and liabilities or capital gains and losses. These are not considered to be part of income and hence are not part of Gross disposable income. Thus a period of high asset price inflation will not directly influence the Household saving ratio. It is important therefore to consider the Household saving ratio in the context of other economic variables such as the changing pattern and composition of household wealth.

Is economic activity measures for different regions of Australia?

The smallest region used in the National Accounts is state/territory. Estimates for each state/territory can be found in Australian National Accounts: State Accounts (cat. no. 5220.0). Estimates of economic activity are not constructed for any other geographical region.

What is an Implicit price deflator?

An implicit price deflator (IPD) is an index obtained by dividing a current price value by its corresponding volume estimate. Thus implicit price deflators are derived measures which reflect price and compositional change and are not normally the direct measures of price change by which current price estimates are converted to estimates at constant prices.

Can the Industry gross valued added data be provided at the 3 or 4-digt ANZSIC level?

Estimates in this publication are provided at the 1-digit ANZSIC level (for example, Construction) or 2-digit level (Manufacturing - Food, beverage and tobacco). Some users might want to have estimates at the 3-digit (Manufacturing - Food, beverage and tobacco - Dairy Product Manufacturing) level or 4-digit level (Manufacturing - Food, beverage and tobacco - Dairy Product Manufacturing - Ice cream Manufacturing). However, as the Industry gross valued added is estimated from data based on sample surveys, data at the finer levels of disaggregation is not available.

Additional Information

Additional information can be found in Understanding how to use National Accounts.

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