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The Census and Statistics Department (C&SD) today (October 18) released the chain volume measures of the Gross Domestic Product (GDP) to replace the previous constant price measures. This is to gear with the latest international statistical guidelines on compilation of the volume measures of GDP.
The change in the volume measure of GDP is widely used as a macro-economic indicator of the real growth of the aggregate economic activity of an economy.
Compared with the previous constant price approach where the price structure as weights for aggregating the volume estimates of the GDP components is only updated once every several years, the new calculation method of chain volume measure is a more enhanced approach, as the price structure is updated every year, thus providing a better measure of the growth of GDP in real terms.
In introducing this methodology enhancement, the GDP real growth rate for the first half of 2007 was revised slightly downwards from 6.3% to 6.1%, and for 2006, from 6.9% to 6.8%. A relatively more significant revision was observed for the real growth rate of GDP for 2000 (from 10% to 8%) due to volatility in the price and volume movements of some of the GDP components. The five-year (2001 to 2006) trend growth of the volume of GDP was revised downwards from 5.6% to 5.4%. Experience in other economies indicates that such downward revisions are normal when chain volume measures are used instead of constant price measures. A comparison of the revised real growth rates of GDP based on the chain volume measure against previously published figures based on the constant price measure is given in Table 1.
In order to maintain comparability of the data series, backdating of historical series of the volume measures of GDP and its components based on the new calculation method was made. For the GDP and its expenditure components, backdating of the volume series was made for the past 20 years. Similarly, the entire volume series of the value added by economic activity were also re-calculated based on the new method and backdated to 2000.
A technical feature of the chain volume measures was that for earlier years, the GDP components in real terms might not add up to the GDP aggregate, owing to the fact that the price weights were updated every year. However, it should be noted that this non-additivity element arose from purely mathematical reasons; the discrepancy should not be interpreted as an indication of the quality of the GDP measure.
The current price GDP is not affected by the new method for calculating the volume measure of GDP, though the estimates for the recent years are subject to revision due to regular updating of data sources and incorporation of latest benchmark data, in particular the 2004/05 Household Expenditure Survey. The level of the current price GDP was revised slightly upwards by an average of 0.1% for the period of 2000 to 2006.
For the GDP deflator which is derived implicitly by dividing the current price estimate of GDP by the volume estimate of GDP, the revision to the year-on-year changes was similar in magnitude, but opposite in direction, to that for the volume measure of GDP.
A government spokesman remarked that an increasing number of statistically advanced economies had changed over from the constant price measures to the chain volume measures of GDP. In implementing the new calculation method for the volume measure of GDP, it provided a better measure of the real growth rate of GDP and enhanced the international comparability of Hong Kong's GDP statistics.
Further information
The complete series of the revised GDP figures are contained in a report entitled "Special Report on Gross Domestic Product - Chain Volume Measures of Gross Domestic Product" published by C&SD. This report also provides details of the concepts and compilation method of the chain volume measures of GDP.
Users can download this publication free of charge at the website of the C&SD (www.censtatd.gov.hk/products_and_services/products/publications/index.jsp). Print version of this publication is available for sale at HK$54 per copy. Purchase can be done in person at the Publications Unit of the C&SD (Address: 19/F Wanchai Tower, 12 Harbour Road, Wan Chai; Tel: 2582 3025) or through mail order by returning a completed order form which can be downloaded from the C&SD's website (www.censtatd.gov.hk/products_and_services/other_services/provision_of_stat/mail_ordering_of_publications/index.jsp). Print version of this publication is also available for sale online at the Government Bookstore of the Information Services Department (www.bookstore.gov.hk).
Ends/Thursday, October 18, 2007
Issued at HKT 16:16
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