About the income and expenditure accounts

Income and expenditure accounts provide two of the three ways to calculate gross domestic product (GDP), the income approach and the expenditure approach (the third way being the value added approach).

Income-based GDP

Income-based GDP is calculated by adding earnings from the factors of production (labour and capital) plus taxes less subsidies, in order to obtain a measure comparable to that of expenditure-based GDP.

Example.

Expenditure-based GDP

Expenditure-based GDP is calculated by adding the final expenditures of the four sectors of the economy: persons, businesses, governments, and non-residents.

Example.

Real GDP

Real GDP is only calculated in terms of expenditure as the components of the income-based GDP cannot be split between a quantity value and a price value. Therefore, there is no indicator enabling us to remove the effect of inflation to calculate real values for the income-based GDP components. This is why only the components that are part of the GDP by expenditures are calculated in real terms.

Real GDP is used by policy makers, financial institutions and other businesses to help determine the health of the nation. Since real GDP measures the volume of goods and services produced, an increase in its value is a sign of a healthy economy while a decline indicates that the economy is not functioning to its full capacity. Real GDP relates directly to other key macroeconomic variables such as employment, business cycles, productivity and long-term economic growth.

Nominal GDP

Nominal GDP, that is GDP calculated by using current dollars, is produced in terms of income and expenditure.

Nominal GDP is used to reconcile income-based with expenditure-based GDP. Those two measures of GDP may not be equal to each other, giving rise to a statistical discrepancy.

Statistical discrepancy

When the calculation of nominal GDP according to the income and the expenditure methods is complete, the difference between these two measures is divided in two to obtain the statistical discrepancy. The halved difference is added to the smaller total and subtracted from the larger one thereby obtaining a nominal GDP that is the same according to the two approaches.

Provincial and territorial economic accounts (PTEA)

GDP and its components are produced annually by province and by territory. The information provided in the provincial and territorial economic accounts is the same as that published in the national income and expenditure accounts, with the exception of the sector accounts, which are not produced at the provincial or territorial level.

Sector accounts

Income and expenditure accounts also include institutional sector accounts which provide greater detail on income, expenditure and saving within the following groups:

• Persons and unincorporated businesses;
• Corporations and government business enterprises (financial and non-financial);
• Governments (three levels); and
• Non-residents.

Historical data

Estimates for the national income and expenditure accounts are currently available from 1961 onward. Although the accounts started in 1926, a number of historical revisions, in which different concepts were applied, created a first break in the series in 1947 and then in 1961. Users can still access some of those estimates but have to use them with caution as they were not calculated using the same methods and concepts as those from 1961 to date. Historical revision of the National Economic and Financial Accounts

Frequency

The quarterly national income and expenditure accounts are released within 60 to 90 days of the reference period. Preliminary annual estimates are also available 60 to 90 days after the end of the year and revised approximately five months after the reference period.

Revision policy

Estimates for each quarter are revised when those for subsequent quarters of the same year are published. Annual revisions are made back four years and released with the first quarter estimates. They are not normally revised again except when historical revisions are carried out, usually once per decade. Statistical revisions incorporate the most recent information such as quarterly and annual surveys, taxation statistics, public accounts, censuses, and the annual benchmarking process of the input-output accounts.