GROSS FIXED CAPITAL FORMATION
Investments in fixed assets present any purchase made by business entities in order to obtain
new fixed assets, as well as to increase the value or replace the existing ones. Acquired capital
goods may be new or previously used, purchased or received in kind from other parties in the
country or abroad, manufactured under own arrangement or obtained through financial leasing.
Included are all investments in new capacities, as well as investments in extensions,
supplementary structures, reconstruction and modernisation of existing or replacement of
obsolete, worn or damaged capacities. Excluded are investments in regular and capital
maintenance of existing capacities.
The data on investments at current prices are based on the “Annual survey on investments in
fixed assets” (INV-01), which has been harmonised with international statistical standards and
methodologies.
Apart from providing data on the national investment activities, the objective of the survey is
to ensure the calculation of Gross fixed capital formation (GFCF) as an aggregate of GDP use,
the creation of capital accounts, etc. However, even though this survey ensures that the major
part of data is obtained, it is necessary to carry out additional calculations to provide data on
GFCF, which are required for the system of national accounts.
Reporting units are all business entities in the country that make direct investments, regardless
the type of ownership. The coverage of the “Annual survey on investments in fixed assets” is
full for large and medium-sized legal entities. Sample method is applied for legal entities that
pursuant to Article 7, the Law on accounting and auditing are classified as small-sized
enterprises, as well as for unincorporated units that are obliged to submit an annual financial
statement. This survey is used to provide data on payments for investments by means of
financing (own funds, joint funds, credits and other funds), data on realised investments by
technical structure (construction works, machinery and equipment and other fixed assets) and
data on construction type (new structures, reconstruction, modernisation, supplementary
structures, extensions and replacement of existing capacities). For the territory and the regions
of the Republic of Serbia, the data are processed according to the sections and divisions of the
Classification of Activities, and for the municipalities the data are processed by sections of
activities. The data are grouped applying the organisational principle (prevailing activity and
head office of investor) and by the kind of activity principle (by destination and location of
investments).
Payments for investments are the monetary investment in fixed capital during the year in which
the payments were actually made, irrespective of the time of construction or acquisition of
fixed capital. Apart from payments in cash, included here are the payments of commercial
credits and financial leasing that were used in the referent year, as well as payments for
translation exposures in the current year, regardless when they occurred.
Realised investments in fixed assets in a reporting year present the value of effectively finalised
constructions, production or acquisition of facilities, equipment and other capital goods,
disregarding whether these investments were accomplished or not and whether they were paid
out or not (excluding investments revaluation).
Investments in fixed assets of natural persons and unincorporated enterprises that do not have
the obligation to submit annual financial statements are calculated by using the data available
from the existing statistical surveys (of construction, agriculture, foreign and domestic trade,
employment, i.e. labour force, etc.), at the section level of the Classification of Activities, by
technical structure of fixed assets (construction works, machinery and equipment and other
capital goods), for the territory of the Republic of Serbia.
The data on GFCF at constant prices are available by technical structure of investments –
investments in construction works (dwellings and other buildings and structures), investments
in equipment (with a split into investments in domestic and imported equipment) and
investments in other fixed assets (cultivated biological resources, mineral exploration,
software, entertainment, literary or artistic originals and other fixed assets), by section level of
the Classification of Activities.
Within each section level (NACE Rev. 2), the calculation of real growth of investments is
carried out by deflating each GFCF component at current prices separately, applying
appropriate deflator (the same one used for certain investments category in all activities).
Deflators are selected among available data sources from the actual statistical system. In
addition, new ones are calculated especially for the constant prices estimation needs.
GFCF at constant prices are estimated based on following data sources:
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Statistical surveys – “Annual survey on investments in fixed assets” (INV-01),
Price statistics – Producer price indices of industrial products for domestic market,
Producer price indices of industrial products by destination of consumption, Producer
price indices of industrial products for selected groups of products for specific needs
and Producer price indices of agricultural products; Consumer price indices,
External trade statistics – Import unit value indices (UVIs),
Labour force statistics – Gross earnings indices,
Administrative sources – Financial statements.
Construction works investments
Since the total input structure for construction includes building materials, wages, energy,
transport and a number of other elements, the deflator used for this part – the Composite price
index for construction works has been developed as a weighted average of various indices: PPI
of materials for incorporating in construction, PPI of energy, PPI of machinery and equipment
n.e.c., PPI of motor vehicles and trailers and index of gross salaries in construction.
With this approach, all cost components (material costs, consumption of fixed capital and
remuneration for employees) are taken into account considering its contribution to the total
construction costs. Weights are obtained based on data from annual construction enterprises
financial statements, as shares of each element costs in the total expenditures of enterprises.
Equipment investments
For estimation of investments in equipment at previous year prices, the following two
composite indices are used as deflators:
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Composite price index for domestic equipment
Composite price index for imported equipment
The starting point for computation of deflators is the detailed results of the “Annual survey on
investments in fixed assets”. For the statistics of investments equipment is divided into
domestic and imported, and these items are further broken down into 10 categories of
investment goods (product groups). For each of these product groups, appropriate price index
is chosen (PPIs for domestic part and exchange rate adjusted import UVIs for imported
equipment). Separate composite price indices are derived for each of the nineteen NACE Rev.
2 sections, because the structures of investment products categories vary across industries.
Composite price indices are obtained by multiplying the weights with the price indices.
Weights are obtained from annual investments survey as share of each product group in total
investments in equipment, at section level.
Investments in other fixed assets
The calculation of investments in other fixed assets at constant prices is carried out by deflating
the current prices values. The deflator for investments in other fixed assets – Composite price
index for other fixed assets is obtained as weighted average of various deflators. For each
element of investments in other fixed assets appropriate deflators are selected: PPI for
agricultural products, PPI for mining, CPI for computer software and accessories, CPI for
recreation and culture, CPI for services and Composite price index for construction works.
At the section level of the Classification of Activities, different composite price indices are
derived. Weights are obtained from annual investments survey as share of each product group
in the total investments in other fixed assets, at section level (NACE Rev. 2).
By adding together investments in construction works, equipment and other fixed assets at
previous year prices, the total GFCF at constant prices is derived. The obtained time series at
previous year prices could not be used for real growth rate calculations since data are not
comparable. To obtain comparable time series, the method of chain-linking is applied and
chain-linked volume measures at relative 2010 prices are calculated. Chain-linked volume
series expressed in monetary terms are not additive.