New National Account Methodology and the Implications for the Greek Economy: ESA 2010 vs ESA 95

Abstract

The main purpose of this paper is to present the main changes of national accounts due to the new methodology of ESA 2010 and to highlight the implications of this new framework for the Greek economy. The findings suggest that the implementation of the new framework had virtually no impact on the rate of change of real Gross Domestic Product (GDP) for Greece and the remaining euro area countries, while the impact for year 2013 was negligible. For the Greek economy private consumption (at current prices) as a percentage of GDP decreased on average from 71.9% to 67.7% in the period 2000-2013. This was to the advantage of public consumption, which increased from 17.8% to 19.8% during the same period, and of the external balance, which benefited from the greater negative impact of the revision on imports than on exports. Total investment as a percentage of GDP moved upward from 20.1% to 20.8%. On the supply side, there were no major changes in the shares of the sub-sectors. In conclusion, the revised national accounts data for the Greek economy confirm the magnitude of the crisis over the period 2008-2013, with economic activity having contracted by 26% within a span of six years. The sharp decline in investment by 63.1% over the same period has a negative impact on the potential output of the economy. This picture could be reversed if investment demand recovers rapidly in the next few years.

Keywords: National Accounts, ESA 2010, ESA 95

JEL Classification: E00, E01, E02