Gross Domestic Product in Latvia, total (ESA 2010) — quarterly data

Gross Domestic Product (GDP) is one of the indicators in the System of National Accounts.

The System of National Accounts is a set of harmonised and conformable macroeconomic indicators, providing an overall picture of the economic situation and is widely used for economic analysis, forecasting and elaboration of the state policy.

Seasonally adjusted GDP data allow determining GDP as an economic indicator over a longer period of time.

National accounts aim to capture economic activity within the domestic territory. They combine data from a host of base statistics, and thus they have no common sampling reference frame. The elementary building blocks of ESA 2010 statistics are statistical units and their groupings. ESA 2010, defines two types of units, institutional units and local kind-of-activity units.

National accounts combine data from many source statistics. The concept of statistical population is not applicable in a national accounts context.

REGULATION (EU) No 549/2013 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 21 May 2013 on the European system of national and regional accounts in the European Union

Statistics database

The geographical comparability of national accounts in Member States of the European Union is ensured by the application of common definitions of the European System of Accounts (ESA 2010).

The Statistical Office of the European Union (Eurostat) publishes on its website information on gross domestic product for the EU-27 and for each country separately - the National Accounts section of Eurostat.

Worldwide geographical comparison is also possible as most non-European countries apply the System of National Accounts (SNA 2008) guidelines, and SNA 2008 is consistent with ESA 2010.

The OECD publishes Member State data.

Comparable data for the period since 1995.

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Calculations are made in line with the methodology of the European System of Accounts (ESA 2010). Main data sources used in calculations are:

• Surveys of enterprises and institutions;
• Labour Force Survey;
• Data from the Budget, the Treasury, the State Revenue Service, the Bank of Latvia and the Financial and Market Commission;
• Household Budget Survey.

The calculations include also estimates for non-response, non-registered units, under-reporting to fiscal administration, income in kind, products produced for own consumption as well as income from illegal activities (e.g., sale of drugs).

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The GDP statistics from production and expenditure approach is calculated at current prices (registration and calculations are made at the actual prices of the respective period) and constant prices. The indicators at constant prices are expressed at prices of the previous calendar year and prices of the reference year (chain-linked).

To calculate GDP at the prices of the previous calendar year the actual prices of the previous calendar year are used as a base and the “annual average” method (where each running quarter (or year) is calculated at the average prices of the previous year) is used. To make the calculations, various deflators are used. Both volume indices and price indices may be used as deflators. The following price indices are used: consumer price index, producer price index, construction cost index, services producer price index, price indices of agricultural products, export unit value index, import unit value index. The following volume indices are used: change in number of employees and change in natural indicators (e.g., in removals, passenger number, freights, etc.).

To calculate GDP at the prices of the reference (base) year (currently, prices of 2020) the indices calculated from the GDP indicators at the prices of the previous year are used to chain-link the calculated volume indices with 2020.

Gross domestic product from the production approach is calculated as a sum of value added plus taxes on products minus subsidies on products.

Value added is calculated by subtracting intermediate consumption from the value of output of goods and services. Output refers to the total products created during the reference year. Intermediate consumption consists of the value of goods and services used during the production. Breakdown of the data by years provides information on value added at current prices at 2-digit level of NACE Rev. 2 classification.

Taxes on products added to the total value added cover the taxes paid at the sale of product, e.g., value added tax, customs and excise duties.

Gross domestic product from the expenditure side at current and constant prices is calculated by summing final consumption expenditure, gross capital formation, exports of goods and services and minus imports of goods and services.

Gross domestic product from the income approach is calculated at current prices only. When calculating GDP from the income approach, the data on the primary income of the economic activity: compensation of employees (wages and salaries in cash and kind and social contributions of employers), taxes on production and imports, subsidies, gross operating surplus and gross mixed income (including consumption of fixed capital).

Gross national income is calculated by summing gross domestic product with property income, compensation of employees and subsidies received from other countries and by subtracting property income, compensation of employees and taxes on production and imports paid to other countries.

In 2019, basing on OECD recommendations for improving the quality of quarterly GDP time-series, disaggregation of annual data by quarters method was changed. Previously, simple mathematical disaggregation method “pro–rata” was used, which divided changes of annual data level proportionally by quarters, thus keeping quarterly increase rates within annual framework, but creating the so-called “step effect” among years. Basing on the data disaggregation quality criteria put forward, as well as on "European Statistical System (ESS) guidelines on temporal disaggregation, benchmarking and reconciliation — 2018 edition", elaborated by the EU Statistics Bureau Eurostat in cooperation with statistical institutions of the member states, the CSB took a decision to change benchmarking method of the annual data by implementing optimal disaggregation of the time-series. After testing several methods, in compliance with quality criteria put forward, “Denton – Cholete” method was chosen.

The direct benchmarking is applied for components at the most detailed level necessary to produce. All aggregates are benchmarked indirectly by the aggregation of the benchmarked components. Indirect benchmarking of aggregates allows to preserve the consistency (additivity) between components and all aggregates. The Denton-Cholette method has been implemented using the R package tempdisagg “Methods for Temporal Disaggregation and Interpolation of Time Series” developed by Christoph Sax, Peter Steiner, and Tommaso Di Fonzo (https://cran.r-project.org/package=tempdisagg).