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									The financial crisis – The need for
    high frequency indicators

 Seminar on the implementation of the
 System of National Accounts 2008 for
         Caribbean countries
Antigua, Antigua and Barbuda, 14-16 June 2010
               Herman Smith
                UNSD/DESA
   Consultations on the Financial and Economic
    Crisis

   The G20 Summit of April, 2009

   International seminars organised by United
    Nations Statistics Division and Eurostat
HighLevel Forum the Long-term Development the SNA,
Washington D.C. , 17-18 November

OfficialStatistics and the Impact of the Global Financial
Crisis, New York, 22 February

High Level Forum on Globalization and Global Crisis:
the role of Official Statistics, New York, 23 February

40th   Session of the Statistical Commission
   2008 SNA the overarching framework for economic
    statistics, able to incorporates measurement issues
    arising from the financial crises

   There was not a lack of information

   Policy makers need the early detection of turning points
    of financial and economic trends

   Remedy data gaps that the crisis has revealed

   Improve the availability, periodicity and timeliness of
    high frequency statistics in accessible and analytically
    useful formats
   The G20 Summit of April, 2009 called for:

   the UN, working with other global
    institutions, to establish an effective
    mechanism to monitor the impact of the
    crisis on the poorest and most vulnerable

   the IMF and FSB to explore information gaps
    and provide appropriate proposals for
    strengthening data collection.
   the United Nations System Chief Executives Board
    for Coordination (CEB) at its April 2009 meeting
    in Paris decided to “… urgently establish an
    United Nations system-wide vulnerability
    monitoring and alert mechanism to track
    developments, and report on the political,
    economic, social and environmental dimensions
    of the crisis”.

   the Secretary-General initiated activities to
    establish an UN system-wide Global Impact and
    Vulnerability Alert System (GIVAS) - consisting of
    a Global Impact and Vulnerability Data Platform
    and a series of Global Alert Products.
◦ IMF (Chair), BIS, ECB, Eurostat, OECD, UN, WB
  established the IAG to coordinate work to
  explore data gaps and strengthen data
  collection
◦ The IAG Group addresses
  key issues related to information gaps on risks
   in the financial sector,
  data on international financial networks
  vulnerabilities of domestic economies to
   shocks and
  the development of the website on Principle
   Global Indicators (PGI)
   UNSD and Eurostat in February 2009 initiated a
    series of three international seminars.
   The purpose of the seminars is to formulate an
    international statistical response to the economic
    and financial crisis for improved monitoring of
    the rapid and systemic changes in the global real
    economy and the financial markets and the
    impacts on vulnerable countries and population
    groups.
   It is expected that the series of seminars will
    recommend an agreed data template for high
    frequency statistics, related metadata and related
    communication and dissemination methods and
    techniques
   The first meeting took place in Ottawa, May
    2009, which discussed the development of a data
    template of high frequency indicators;
   Support for an international data template for high
    frequency statistics to monitor economic activity
    and detecting changes
   determine its relevance and feasibility in terms of
    availability, periodicity, timeliness and
    dissemination through global baseline assessment
   re-arrange the data template in different tiers
    based on analysis of global assessment
   the high frequency statistics for individual
    countries should be complemented by analytical
    indicators and time series of world and regional
    aggregates for those high frequency statistics
    which are sufficiently comparable.
   develop a glossary of terms and definitions
    around high frequency statistics (covering terms
    like nowcast, forecast, flash, rapid and first
    estimate, etc.)
   clarify the need to develop new manuals or
    update existing handbooks and guidelines on
    GDP flash estimates, and economic sentiment
    surveys and composite indicators
   determine how to better communicate and
    disseminate data on the movement of the
    business cycles and trend developments
    Global assessment of Ottawa template

   Ottawa seminar identified a data template with 12
    categories

   National accounts, production and turnover
    indicators, prices, labour market indicators, sectoral
    indicators for the external, financial, government,
    non-financial and household sector, financial and
    real estate market indicators, and economic
    sentiment indicators

   Global assessment to determine the availability,
    timeliness, periodicity and dissemination of high
    frequency indicators
    Overview of response
                                   Percentage   Percentage of
           Number of   Number in    of 2008         2008
Grouping   responses     group        GDP        population     Response rate

World        101         211         87.8          80.2            47.9
High
              24          29         89.5          90.2            82.8
income
Middle
              53         103         89.4          91.4            51.5
income
Other         24          79         55.2          21.5            30.4

CARICOM       7           20         66.2          28.8            35.0
          Response by question


                        Percentage of countries compiling
          100
          80
          60
Percent

          40
          20
          0




                1   2       3   4   5    6       7   8   10   12

                                        Set Number
                                 Response by question

                                                          Periodicity
Percentage of Countries

                          100




                                                                                                  Annually
                                                                                                  Quarterly
                          60




                                                                                                  Monthly
                                                                                                  Weekly
                          0 20




                                                                                                  Daily


                                  1   2   3   4   5   6       7         8   9 10   11   12


                                                           Set Number



                                                          Timeliness
Percentage of Countries

                          100




                                                                                             More than 180
                                                                                             180 or less
                          60




                                                                                             90 or less
                                                                                             60 or less
                          0 20




                                                                                             30 or less
                                                                                             7 or less

                                  1   2   3   4   5   6       7         8   9 10   11   12


                                                           Set Number
    Response by CARICOM Countries
 National Accounts mainly annual
 Production and turnover – only 2 quarterly, another
  has retail trade monthly
 CPI monthly – PPI and I&E indices weak

 Employment data – mainly annual

 CB and Monetary stats – quarterly and monthly mix

 Monthly GG data

 Almost no HH and Non-Fin corps

 Weak financial market data

 No residential property

 Only has confidence indicators
    Outcome of the assessment


 Ottawa data template of a core set of
 indicators by categories with regional and
 world totals is feasible
 The template is recognized as appropriate
 for monitoring rapid and systemic changes
 in the real economy and the financial
 markets

 Three   levels or tiers were recognized
  Three Tier Approach

 Tier 1 - includes indicators that are compiled infra
  annually by more than 60 per cent of counties.

 Tier 2 - includes indicators that are compiled infra
  annually by between 30 to 60 per cent of high and
  middle income countries and is supplemented by
  strategically important indicators.

 Tier 3 - includes indicators below a 30 per cent
  response rate that can be included in national
  templates.
        Tier 1
                              Indicator description                  Periodicity
Set 1 National accounts
1.1      Quarterly national accounts: Flash GDP estimate             Quarterly
1.2.1    GDP full release by expenditure                             Quarterly
1.2.2    GDP full release by production                              Quarterly
Set 2 Production and turnover
2.1      Production index for industry, by major division (mining,    Monthly
            manufacturing, electricity, water, etc.)
Set 3: Price Indicators
3.1      Consumer price index                                         Monthly
3.2      Producer price index                                         Monthly
3.3      Import price index                                           Monthly
3.4      Export price index                                           Monthly
Set 4: Labour market indicators
4.1      Unemployment                                                Quarterly
4.2      Unemployment rate                                           Quarterly
4.3      Employment total and by economic activity                   Quarterly
Set 5: External sector indicators
5.1      Exports and imports (of goods and services)                  Monthly
5.3      Official reserve assets                                      Monthly
5.4      External debt (by sector, maturity and foreign currency)    Quarterly
       Tier 1
                            Indicator description                    Periodicity
Set 6: Financial sector indicators
6.1      Central Bank net foreign assets                              Monthly
6.2      Central Bank domestic lending                                Monthly
6.3      Central Bank reserve money                                   Monthly
6.4      Depository corporations net foreign assets                   Monthly
6.5      Depository corporations domestic lending                     Monthly
6.6      Depository corporations broad money liabilities              Monthly
Set 7: General government sector indicators
7.1      Revenue                                                      Monthly
7.2      Expense                                                      Monthly
7.3      Net operating balance (= Revenue – Expense)                  Monthly
Set 10: Financial market indicators
10.1     Interest rates, as relevant short and long term money and    Monthly
             bond market rates
10.2     Exchange rates, as relevant spot and forward markets         Monthly
10.3     Nominal and real effective exchange rate                     Monthly
10.4     Stock market indicators                                      Monthly
        Tier 2
                            Indicator description                    Periodicity
Set 1 National accounts
1.2.3    GDP full release by income                                  Quarterly
Set 2 Production and turnover
2.2      Production index for construction                            Monthly
2.3      Turnover index for retail trade by major division            Monthly
2.4      Turnover index for industry by major division                Monthly
2.5      Turnover index for other services by major division          Monthly
            (excluding financial services and non-commercial
            services)
2.7      New orders index for construction (building permits or       Monthly
           housing starts)
Set 4: Labour market indicators
4.4      Hourly wage rate                                            Quarterly
4.5      Hours of work                                               Quarterly
Set 5: External sector indicators
5.2      International investment position (IIP), specify balances   Quarterly
             and components
       Tier 2
                            Indicator description                 Periodicity
Set 6: Financial sector indicators
6.7      Other financial corporations balance sheet, assets and    Monthly
            liabilities by sector.
6.8      Financial corporate profits                              Quarterly
6.9      Financial corporate debt                                  Monthly
Set 7: General government sector indicators
7.4      Net acquisition of non-financial assets                  Quarterly
7.5      Expenditure                                              Quarterly
7.6      Net lending/net borrowing (= Revenue - Expenditure)      Quarterly
7.7      Gross debt                                               Quarterly
Set 8: Household sector indicators
8.1      Household disposable income                              Quarterly
8.2      Household saving                                         Quarterly
8.3      Household debt                                           Quarterly
Set 11: Real estate market indicators
11.1     Residential property price index                         Quarterly
Set 12: Economic sentiment
12.1     Consumer confidence                                       Monthly
12.2     Business confidence                                       Monthly
         Tier 3
                                                                       Compilation
                              Indicator description                     per cent     Periodicity
Set 2 Production and turnover
2.6       New orders index for industry by major ISIC division (for                   Monthly
          those that work on order)
2.8       Commodity production (as relevant at country level data on                  Monthly
          commodity productions and other indicators of economic
          activity)
Set 9: Non-financial corporations sector indicators
9.1       Non-financial corporate profits                                            Quarterly
9.2       Non-financial corporate debt                                               Quarterly
Set 11: Real estate market indicators
11.2      New house sales                                                             Monthly
11.3      Existing house sales                                                        Monthly
Set 12: Economic sentiment
12.3      Composite Business Cycle Indicators
12.3.1    Leading Indicator                                                           Monthly
12.3.2    Coincident Indicator                                                        Monthly
12.3.3    Lagging Indicator                                                           Monthly
   Some work was done on the type and
    availability of a comparable set analytical
    indicator to facilitate economic analysis

   The availability of analytical indicators at
    country level at agreed periodicity would
    significantly enrich the analysis of the
    regional and global aggregates, because of
    its supplementary and more detailed
    information content
◦   Inventory over sales ratio
◦   Household debt to household disposable income
◦   Growth in equity prices relative to GDP growth
◦   Financial Conditions Index
◦   Etc
   The second meeting took place in Scheveningen,
    December 2009, which discussed a global
    assessment of the Ottawa data template and the
    development of methodology and guidance on
    high frequency indicators.
Five themes:
 ◦ the role of sentiment indicators in tracking
   economic trends;
 ◦ the role of composite indicators in tracking
   business cycles;
 ◦ flash estimates of gross domestic product;
 ◦ the analytical framework for assessing rapid
   economic changes; and
 ◦ communication and dissemination of indicators

Outcome:
 ◦ To facilitate the work on the outcome of the
   seminar five work groups were formed
   The Working Group on Economic Sentiment
    Indicators will conduct a global survey on
    sentiment indicators and analyse existing practices.
    Moreover, UNSD will establish a knowledge
    platform on economic sentiment indicators.

   The Working Group on Composite Indicators will
    undertake the review of existing guidelines on the
    collection, compilation and application of
    composite indicators.
    ◦ Colloquium – Sept 2010.
    ◦ CIRET – Oct 2010
   The Working Group on Flash GDP will advance the
    work on terminology, conceptualisation and
    purpose of flash GDP estimates.

   The Working Group on the Data Template and
    Analytical Indicators will finalise the data template,
    meta data and related analytical indicators.

   The Working Group on Communication and
    Dissemination will create a knowledge base and
    review the availability of existing visualisation tools
    and methodological guidance.
   November 2010 in Russia

   Purpose
    ◦ Discuss the work of the working groups
    ◦ To prepare a report to the UNSC on
      an agreed statistical framework of HFI
      international comparability of HFI,
      the related analytical framework for monitoring early
       warning and business cycle indicators
      the communication and dissemination of HFI
   The financial crisis revealed the need for HFI for the
    early detection of changes in economic trends
   The availability of structural and annual data tell us
    about the past
   The need is for information about the present
   This will facilitate more timely policy responses
   Data collection practises need to be adapted to
    facilitate the dissemination of HFI
   HFI are also relevant for expanding the scope and
    detail of the national accounts
Reports of the previous meetings:
Ottawa

http://unstats.un.org/unsd/nationalaccount/workshops/2009/ottawa/ac188-2.asp




Scheveningen

http://unstats.un.org/unsd/nationalaccount/workshops/2009/netherlands/ac202-2.asp



SNA News and Notes Issue 29

http://unstats.un.org/unsd/nationalaccount/sna/nn29-en.pdf
Thank You

								
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