Concepts And Definitions

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GROSS DOMESTIC PRODUCT (GDP)     

In   order to avoid double-counting the value of the inputs from other industries has to be deducted.

Thus value added is estimated by deducting intermediate inputs from gross output.

MARKET PRICES AND FACTOR COST

Market prices represents the actual price paid by purchasers for the goods and services produced.

It therefore includes all indirect taxes charged by Government but is less of subsidies.

CURRENT AND CONSTANT PRICES

To obtain GDP at constant prices, which would represent only changes in actual output, the following two methods can be used:-

a) Value the output in the current year based on the price of the output in the base year. This is done using a volume   index.

b) Deflate the current year values using an index of price changes since the base year.

FINAL CONSUMPTION EXPENDITURE

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Government Final Consumption Expenditure

This is defined as the value of the gross output of producers of Government services less the value of Government sales and the value of its own-account capital formation.  The gross output is equal to the cost of production, that is, the sum of intermediate consumption of goods and services, compensation of employees and consumption of fixed capital.  For St. Lucia consumption and compensation of employees.

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The Government final consumption expenditure, consists therefore, of the purchase of goods and services, and expenditures on compensation of employees less the revenue received from sales.  Sales do not include fees and charges that are levied by Governments for regulatory purposes.  Examples are payments of driving tests, vehicles licenses, driving permits, passports fees charged for court services, all of which are defined as fees when paid by households and as indirect taxes when paid by enterprises.  Fines and penalties are also excluded from sales and classified as "fines and penalties" whether paid by households or enterprises.  These items are not to be deducted from gross output to arrive at final consumption expenditure.

Private Final Consumption Expenditure:

Private final consumption expenditure consists of the following components:

(i)       Final consumption expenditure of households in domestic market;

(ii)      Plus:  Direct purchases abroad by resident households;

(iii)     Less: Direct purchases in the domestic market by non resident household;

(iv)     Equals:  Final consumption expenditure of households;

(v)      Plus: Final consumption expenditure of private non-profit institutions   serving  households;

(vi)     Equals: Private final consumption expenditure.

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The final consumption expenditure of households consists of outlays which households make on new, durable and non-durable goods and services less net sales of second-hand goods and scraps.  Purchases by households of consumer durable, such as furniture, radios and automobiles are all included in private final consumption expenditure.  Primary commodities produced for own-account consumption should always be included in gross output and in household consumption expenditure.   Purchases of dwellings are not included, they are treated as fixed capital formation.  The imputed rent of owner-occupied dwellings which is part of the gross output of the real estate industry, is included in final consumption expenditure of households.

Direct purchases abroad by resident households and in the domestic market by non-resident households cover expenditures by diplomats, military personnel, tourists and seasonal workers who remain in foreign countries for periods less than one year.

GROSS CAPITAL FORMATION

Gross Fixed Capital Formation:

This consists of additions to the assets of producers of tangible reproducible goods which have an expected lifetime of use of one year or more.  The producers in question may be industries, producers of Government services and producers of private non-profit services to household.  The capital goods may be purchased or produced on own account.  Sales less purchases of second-hand fixed assets and sales of scrapped fixed assets by producers should be deducted from gross fixed capital formation.  Gross fixed capital formation covers the following items:

(i) Acquisitions by producers for civilian use of tangible assets which have an estimated lifetime of use of one year or more, except land, and similar non-reproducible tangible assets.  Relatively inexpensive   durable reproducible goods, such as certain types of office equipment, may on practical grounds be excluded. Government outlays on construction and machinery and durable equipment primarily intended for military use, are classified as intermediate consumption rather than gross fixed capital   formation.

(ii) Outlays on improvements and alternations of capital goods which significantly extend their expected  lifetime of use or substantially increase their productivity are in gross fixed capital formation.

(iii) Outlays on the reclamation and improvement of land, on the development plantations and similar  agricultural holdings are included in gross fixed capital formation.

(iv) Purchases of cattle for breeding and diary cattle should be treated as acquisitions of fixed assets.

(v) Dealers' margins, solicitors' fees, stamp duties and other transfer costs of transactions in land similar   non-reproducible assets in tangible non-financial assets and in second-hand assets are covered in  gross   capital formation.

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Change in Stocks

This is equal in principle to the market value  at the owning establishment of the physical change during a period of account in stocks of materials, supplies, work-in progress except on construction projects, finished products, livestock raised for slaughter and merchandise held by resident industries and in stock of strategic material and emergency stocks of important products held by Government services.  In practice, the closest feasible approximation may be the difference between the levels of these stocks at the beginning and end of the period, both valued at approximate average prices ruling over the period.

SUBSIDIES

Subsidies are grants on current account paid by the Government and which are clearly intended to compensate the recipient for losses incurred as a direct result of the Government policies to maintain prices at a level below the cost of production.

Any Government grants to producers which are not connected with their productive activities but are given them in the capacity of customers such as social assistance grants and social security benefits should be treated as current transfers and not as subsidies.

EXPORTS AND IMPORTS OF GOODS AND NON-FACTOR SERVICES

This is defined to include merchandise, transport and communication, insurance services and other miscellaneous goods and services.  Direct purchase in the domestic market by non-residents (tourists) are included in exports, and direct purchases abroad by residents are included in imports.  For purposes of national accounts merchandise trade includes all goods crossing the geographical boundaries of a country including those in bonded warehouses and free-trade areas.   Also included are fuel and stores sold or purchased abroad by ships and aircraft operated primarily in international waters by resident enterprises.  Exports of goods are recorded F.O.B. and imports are recorded C.I.F.

Gross National Product

Gross National Product is the sum of gross primary  income /product received by resident institutional units /sectors. GNP is equal to GDP less primary income payable to non-resident units plus primary income receivable  from non-resident units         

Symbols And Conventions

Pj = Projected

(cp) = Current Prices

(kp) = Constant Prices

---  Data not available

- Value negligible or zero

All values are in EC millions of dollars

Rate of exchange US$ = EC$2.71

Constant Price Estimate - Base Year 1990