The financial crisis – The need for
high frequency indicators
Seminar on the implementation of the
System of National Accounts 2008 in the
Western Asia Region
Muscat, Oman, 23-26 May 2010
Herman Smith
UNSD/DESA
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Consultations on the Financial and Economic
Crisis
The G20 Summit of April, 2009
International seminars organised by United
Nations Statistics Division and Eurostat
High
Level Forum the Long-term Development the SNA,
Washington D.C. , 17-18 November
Official
Statistics 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
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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
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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.
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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)
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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
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The first meeting took place in Ottawa, May
2009, which discussed the development of a data
template of high frequency indicators;
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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.
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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
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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
Number of
responses
Number in
group
Percentage
of 2008
GDP
101
211
87.8
80.2
47.9
24
29
89.5
90.2
82.8
53
103
89.4
91.4
51.5
Other
24
79
55.2
21.5
30.4
ESCWA
7
14
72.7
60.6
50.0
Grouping
World
High
income
Middle
income
Percentage of
2008
population
Response rate
Response by question
0
20
40
Percent
60
80
100
Percentage of countries compiling
1
2
3
4
5
6
7
Set Number
8
10
12
Response by question
100
60
Annually
Quarterly
Monthly
Weekly
Daily
0 20
Percentage of Countries
Periodicity
1
2
3
4
5
6
7
8
9 10
11
12
Set Number
100
60
More than 180
180 or less
90 or less
60 or less
30 or less
7 or less
0 20
Percentage of Countries
Timeliness
1
2
3
4
5
6
7
Set Number
8
9 10
11
12
Response by Western Asia Countries
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National Accounts mainly annual
Production and turnover – mainly industrial
production – but mainly quarterly
CPI monthly – PPI and I&E indices weak
Employment data – annual
CB and Monetary stats – weak seems CB not
consulted
Only 2 countries reported GG data
Almost no HH and Non-Fin corps
Weak financial market data
No residential property and composite 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,
manufacturing, electricity, water, etc.)
Monthly
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
bond market rates
Monthly
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
(excluding financial services and non-commercial
services)
Monthly
2.7
New orders index for construction (building permits or
housing starts)
Monthly
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
and components
Quarterly
Tier 2
Indicator description
Periodicity
Set 6: Financial sector indicators
6.7
Other financial corporations balance sheet, assets and
liabilities by sector.
Monthly
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
Indicator description
Compilation
per cent
Periodicity
Set 2 Production and turnover
2.6
New orders index for industry by major ISIC division (for
those that work on order)
Monthly
2.8
Commodity production (as relevant at country level data on
commodity productions and other indicators of economic
activity)
Monthly
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
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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
◦ Ratio of the value of housing to household
disposable income
◦ Household leverage, i.e. ratio of household net
worth to disposable income
◦ Growth in equity prices relative to GDP
◦ Financial Conditions Index
◦ Etc
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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
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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
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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.
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Fall 2010
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
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The financial crisis revealed the need for HFI for the
early detection of changes in economic trends
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The availability of structural and annual data tell us
about the past
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The need is for information about the present
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This will facilitate more timely policy responses
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Data collection practises need to be adapted to
facilitate the dissemination of HFI
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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