Production, Income, Expenditure, Saving and Investment Accounts

The production, income, expenditure, saving and investment accounts record the production of goods and services in the economy, the incomes arising from this production, expenditures on production and the resulting saving (dissaving) and investment. The recording of the information in a series of interrelated accounts allows analysts to formulate consistent interpretations of productive activity with income, expenditure, saving and investment. The information is presented in the form of economic accounts that parallel, to some extent, the statements used in business accounting. The economic series' estimates that appear in a number of accounts are identical and/or consistent, because common definitions, classifications and valuations are used across the entire set of accounts.

Gross domestic product (GDP) lies at the centre of the production, income, expenditure, saving and investment accounts. GDP is the unduplicated value of goods and services produced during a period that is available for final domestic consumption, investment or export. The national income and expenditure account records the value of GDP from two perspectives, as income arising from production and as final expenditure on goods and services produced. In real terms (that is, adjusted for price change), GDP is representative of the volume of economic activity in a given period. The national production account provides a measure of gross value added by industry—total output (or sales) less intermediate consumption.

The income and expenditure accounts also record the distribution and use of income by the six main institutional sectors: households, non-profit institutions serving households, general governments, non-financial corporations, financial corporations and non-residents. These accounts articulate revenues to the sector (including current transfers from other sectors, such as employment insurance received) and current expenditures of the sector (including transfers to other sectors, such as income taxes paid to government). The difference between a sector’s income and its expenditure results in an estimate of that sector's saving.

The accumulation of capital is also central to the sector accounts. The capital (or investment) account’s focus is on economic agents' decisions regarding investment in non-financial assets. The account records whether or not a sector’s current period savings are sufficient to meet its demand for funds (for investment). The balance of the capital account produces an estimate of each sector's net lending (saving greater than investment) or borrowing (saving less than investment).