Press release, 13.03.2015.
Press release of the Hungarian Central Statistical Office in connection with the article titled ‘Mesevilág’ published on 12 March 2015 in HVG
Since we consider HVG a decisive, opinion-forming weekly, and the opinion of two former presidents of HCSO published in HVG may seem credible in the eyes of laymen, the office considers it important to publicly disclose its standpoint connected with the article titled ‘Mesevilág’ published on 12 March 2015 in HVG.
Understanding the basic concepts and an – at least schematic – overview of the methodology of calculation are essential for interpreting GDP data. In the past years, the experts of HCSO gave information on the very complicated methodology of GDP and national accounts calculations in a number of occasions at professional meetings and meetings organized for journalists, which methodology is otherwise accessible on the website of HCSO as well.
In the calculation of GDP data from the production side, there is no ‘deflator’, since the calculation is based on the methodology of double deflation. Therefore, GDP has only a so-called implicit price index, which can be calculated subsequently, after the completion of the calculation. Between the implicit price index of GDP and the consumer price index, there is no identity only an indirect connection, which has numerous economic and methodological reasons considering both the production and the expenditure sides.
Due to the specific feature of the calculation algorithm, the implicit price index of GDP cannot be interpreted as a single and independent price index. On the production and the expenditure sides of GDP (and within their items as well), implicit price indices interpretable for the various part aggregates are prepared by different methods. On the production side, when calculating quarterly GDP, current price data are the starting point, which are validated by the current price data of subject matter statistics. Following the principle of double deflation, output and intermediate consumption values at previous year’s prices are calculated at the level of industries with the help of available output and intermediate consumption price indices. During the assessment, price indices by activities (NACE) are used, which are defined from price indices by products (e.g. Industrial Product Classification, IPC) taking into account the structure of supply and use matrices. The difference between the output and the intermediate consumption gives the value added at previous year’s price by industries, which is aggregated to the level of the national economy and calculated with value based prices. Thus, the basic equation is as follows:
Output minus intermediate consumption is equal to gross value added (all these on the level of industries)
Besides, the balance of taxes and subsidies on products is part of the GDP calculated at market prices, the value of which calculated at previous year’s prices is prepared, in line with international recommendations with direct volume calculation and not with deflation. Therefore, in this case, the implicit price index cannot be economically interpreted.
The equation of GDP on the production side is as follows:
Gross value added plus taxes on products minus subsidies on products is equal to gross domestic product (GDP)
On the expenditure side of GDP, the procedure is somewhat different: the individual part aggregates are deflated by using different primary price indices (consumer price index, investment price index, foreign trade price index) or implicit price indices in case of the general government, while in some cases, data with previous year’s prices are prepared with direct volume calculation.
In the calculations for the 4th quarter of 2014, there were no changes in the methodology of deflation, for many years, HCSO has been performing calculations according to international methodological standards, which are, otherwise, checked in details by the European Commission (Eurostat). Based on the above, it can be stated that – sometimes even large – differences were in the past and will be in the future between the consumer price index and the implicit price index, which is proven to be the case in other EU member states as well. Similarly, there may be significant differences between infra-annual (quarterly, monthly) data and annual data collected after closing the year.
The experts interviewed by HVG communicated incorrect information due to the lack of knowledge of methodology or other reason and unjustly suspected the experts of HCSO of manipulating data. We hereby reject the accusations and unfounded assumptions of the author of the article and the experts interviewed as well as casting doubt on the credibility of statistical information provided by HCSO.
HCSO is an independent institution and performs its professional activities on scientific bases in a transparent way applying international methodological standards. Its aim is to provide as many users as possible with as many data and information of as good quality as possible through the channel which is the most suitable for them. The Hungarian Central Statistical Office is committed to the concurrent, impartial and objective information of users. Our analyses serve the better understanding of relationships between data.
The office is continuously collecting user opinions and monitoring technological changes. Its developments are performed taking these into account.
From 4 March 2015 on, the content and form of our first releases get renewed, about which we informed our users in advance and contacted the major user groups, such as the representatives of the media (including HVG) with a separate letter. At the same time, explicitly on the basis of user feedbacks, statistical reflections containing the second estimates of leading indicators (GDP, industry, external trade, retail trade) were returned to the system of first releases in a way that the changes should not reduce the amount of information provided and, at the same time, they should improve the opportunity for further calculation and reusability. Prior to this, a major change was made on the website of HCSO on 7 March 2012, which was also based on user opinions.
The data content of our publications is continuously passed to formats which support further usability considered especially important by users. Thus, data, which were earlier accessible only in tables in PDF format attached to the publications can, starting from March 2015, be accessed by a direct link in the publications (by clicking), from the STADAT system and from the dissemination database containing tables which can be exported to Excel. So, there can be no data loss, but the use of data will become easier. In parallel, we try to facilitate the interpretation of data for those whose statistical skills are not sufficiently deep in the given domain, however, the interpretation of data, called ‘evaluation’ by the journalist is always objectively formulated. The interpretation of data never replaces the availability of data, and we do not even wish to move in this direction.
HCSO continues to be ready to contribute to clarifying relationships and methodological issues. In connection with data, publications and related methodological information, services data collections and events of HCSO, users can contact the office through multiple communication channels (e.g. on the e-mail address given in the ‘Contact us’ menu item of the website, through the menu items ‘Experts’, the ‘Pressroom’, ‘Information service’ or on Facebook). Such contact details are indicated in the publications which give the opportunity for those interested to always get into contact with our most experienced experts – to indicate the functional contact details is otherwise the international practice.
Hungarian Central Statistical Office
H-1024 Budapest, Keleti Károly u. 5-7. Phone: +36 (1) 345 6000
Postal address: P.O.B. 51 Budapest, H-1525