TECHNICAL NOTES

 

 

Gross Regional Domestic Expenditure (GRDE)
 
The Gross Regional Domestic Expenditure (GRDE) is intended to complement the current series of the Gross Regional Domestic Product (GRDP), which is being published by the Macroeconomic Accounts Service (MAS) of the Philippine Statistics Authority (PSA).  GRDE is defined as the expenditure of residents of the region in the domestic territory plus their expenditures in other regions including the rest of the world.
 
The revised/rebased GRDE series adopts the CY 2000 as the new base year, incorporating most of the recommendations of the 2008 System of National Accounts (SNA) and consistent with the Annual and Quarterly revised/rebased series of the Philippine System of National Accounts (PSNA).  
 
In using the GRDE for specific studies or analyses, the following points should be considered:
 
  1. The GRDE estimation starts with the GRDP estimates, which is pegged to the national estimates. These are allocated to the regions using survey and administrative-based data/indicators for regional distribution.  
     
  2. Household Final Consumption Expenditure (HFCE) covers both individual and institutional households, as well as non-profit institutions serving households (NPISH). It is assumed that the structure of NPISH and institutional households is the same as that of the individual households.  As recommended in the 2008 SNA, the HFCE estimates utilized the Classification of Individual Consumption According to Purpose (COICOP) to account for the various expenditures of the households. Data from relevant production sectors, including the Family Income and Expenditures Surveys (FIES) are utilized to come up with estimates of HFCE.   The price data used are the Consumer Price Index (CPI) by region of the PSA. 
     
  3. Government Final Consumption Expenditures (GFCE) is independently estimated by region using the regional data of the Commission on Audit (COA), which covers both the national agencies and local government units in the region for the revised estimates and the National Expenditure Program of the Department of Budget and Management (DBM) for the preliminary estimates.  The GFCE is the summation of the Gross Value Added (GVA) of Public Administration (PAD) by region, which is estimated for the GRDP and the intermediate consumption of the government, which is estimated for the GRDE, including the government expenditures for individual services (i.e. public health, public education and social welfare).  Consistent with the Annual and Quarterly revised/rebased estimates, the regional GFCE no longer includes government expenditures for military equipment and structures.  These items are now included as part of Capital Formation under Durable Equipment and Construction, respectively. The price indices utilized in the GVA for the regional PAD and the CPI by region are used as deflators.
     
  4. For construction, private construction is estimated using the regional building permit data of the PSA.  The deflator used was composite deflator, taking into account the labor, raw materials, and other value added component of construction cost. Public construction is estimated using the trend of infrastructure outlays by government agencies from the Budget of Expenditures and Sources of Financing (BESF) compiled by the Department of Budget and Management (DBM), which is allocated to regions using the data on expenditure programs by region of the Department of Public Works and Highways (DPWH); and Department of Transportation and Communication. Public construction now includes military structures, as mentioned above.  A composite deflator for each region is computed to derive the corresponding estimates at constant prices.
     
  5. Durable equipment (DE) by region is estimated using commodity flow approach. The acquisition of durable equipment commodity can be directly imported or locally purchased. At current prices, imported DE used the distribution of cost, insurance and freight from the Foreign Trade Statistics (FTS) by region per port while locally purchased DE utilized indicators of the Manufacturing sector from the GRDP.  As mentioned above, estimates of regional expenditures for DE now includes military equipment.  At constant prices, imported DE by region is estimated using the FTS as an indicator while locally purchased DE used the derived regional implicit price indices (IPIN) for DE. 
     
  6. For Breeding Stocks and Orchard Development (BSOD), the estimates are based on the regional inventory, production and price data of the PSA. Afforestation is no longer part of BSOD since it is treated as an activity undertaken to produce a product for single use such as vegetable production.  For the GRDE, each component of the BSOD is independently estimated for both the current and constant prices. Imports of breeding stocks are also considered in the estimates.
     
  7. Intellectual Property Products (IPPs) is a new item included under Capital Formation.  It includes expenditures on research and experimental development (R&D), software and databases, mineral exploration, and entertainment, artistic and literary originals. They are collectively known as IPP’s since expenditures on these items or their value reflects the underlying intellectual property they embody. Estimates for IPP’s are based on the corresponding items in the Annual Survey of Philippine Business and Industry (ASPBI) of the PSA and the R&D Survey of the Department of Science and Technology (DOST).  Preliminary estimates are based in the indicators related to these expenditure items.  At constant prices, the most appropriate price indices related to the IPP’s are used as deflators.
     
  8. For changes in inventories, inventory data of selected agricultural commodities by region are available of the PSA, National Food Authority (NFA) and Sugar Regulatory Administration (SRA). The inventory data of establishments by region is available from the Quarterly Survey of Philippine Business and Industry (QSPBI) of the PSA.  For the other sub-sectors that do not have actual regional inventory data, appropriate indicators for regional distribution are used to obtain the regional estimates of changes in stocks.  For crude oil and petroleum, the available regional storage capacity of bulk plants and refineries from the Department of Energy (DOE), and regional Maintenance and Other Operating Expense (MOOE) from the COA for the Government sector were used as indicators to allocate the national estimates into regions. The deflators used for the constant price estimates are the appropriate prices/price indices of the PSA, DOE and the estimated IPIN for GFCE.
     
  9. In the absence of data on regional trade flow, net export was derived as a residual item.  Hence, net export refers to the combined effect of the income flows between regions, the commodity flows between regions and the rest of the world.  Net Export no longer includes the monetization/demonitization of gold. This item is treated as a financial asset under the financial account. Validation is made using the Foreign Trade Statistics (FTS) and commodity flow data of the PSA as well as GRDP estimates by region.
 
 
Gross Regional Domestic Expenditure (GRDE)
 
The Gross Regional Domestic Expenditure (GRDE) is intended to complement the current series of the Gross Regional Domestic Product (GRDP), which is being published by the Economic Statistics Office (ESO) of the Philippine Statistics Authority (PSA).  GRDE is defined as the expenditure of residents of the region in the domestic territory plus their expenditures in other regions including the rest of the world.
 
The revised/rebased GRDE series adopts the CY 2000 as the new base year, incorporating most of the recommendations of the 2008 System of National Accounts (SNA) and consistent with the Annual and Quarterly revised/rebased series of the Philippine System of National Accounts (PSNA).
 
In using the GRDE for specific studies or analyses, the following points should be considered:
1. The GRDE estimation starts with the GRDP estimates, which is pegged to the national estimates. These are allocated to the regions using survey and administrative-based data/indicators for regional distribution.
 
2. Household Final Consumption Expenditure (HFCE) covers both individual and institutional households, as well as non-profit institutions serving households (NPISH). It is assumed that the structure of NPISH and institutional households is the same as that of the individual households.  As recommended in the 2008 SNA, the HFCE estimates utilized the Classification of Individual Consumption According to Purpose (COICOP) to account for the various expenditures of the households. Data from relevant production sectors, including the Family Income and Expenditures Surveys (FIES) are utilized to come up with estimates of HFCE.   The price data used are the Consumer Price Index (CPI) by region from the PSA.
 
3. Government Final Consumption Expenditures (GFCE) is independently estimated by region using the regional data of the Commission on Audit (COA), which covers both the national agencies and local government units in the region for the revised estimates and the National Expenditure Program of the Department of Budget and Management (DBM) for the preliminary estimates.  The GFCE is the summation of the Gross Value Added (GVA) of Public Administration (PAD) by region, which is estimated for the GRDP and the intermediate consumption of the government, which is estimated for the GRDE, including the government expenditures for individual services (i.e. public health, public education and social welfare).  Consistent with the Annual and Quarterly revised/rebased estimates, the regional GFCE no longer includes government expenditures for military equipment and structures.  These items are now included as part of Capital Formation under Durable Equipment and Construction, respectively. The price indices utilized in the GVA for the regional PAD and the CPI by region are used as deflators.
 
4. For construction, private construction is estimated using building permits from the NSO by region and the undercoverage is assumed to be uniform because there are no data currently available to estimate the undercoverage ratio for each region.  The deflator used was based from regional price differentials of CPI applied to national deflator of private construction.  Public construction is estimated using the trend of infrastructure outlays by government agencies from the Budget on Expenditures and Sources of Finance (BESF) compiled by the Department of Budget and Management (DBM), which is allocated using data on regional infrastructure programs of the Department of Public Works and Highways (DPWH) from the National Expenditure Program of the DBM. Public construction now includes military structures, as mentioned above.  A composite deflator for each region is computed to derive the estimates at constant price for all regions.
 
5. Durable equipment (DE) by region is estimated using commodity flow approach. The acquisition of durable equipment commodity can be directly imported or locally purchased. At current prices, imported DE used the distribution of cost, insurance and freight from the Foreign Trade Statistics (FTS) by region per port while locally purchased DE utilized indicators of the Manufacturing sector from the GRDP.  As mentioned above, estimates of regional expenditures for DE now includes military equipment.  At constant prices, imported DE by region is estimated using the FTS as an indicator while locally purchased DE used the derived regional implicit price indices (IPIN) for DE.
 
6. For Breeding Stocks and Orchard Development (BSOD), the estimates are based on the regional inventory, production and price data from the Bureau of Agricultural Statistics (BAS). Afforestation is no longer part of BSOD since it is treated as an activity undertaken to produce a product for single use such as vegetable production.  For the GRDE, each component of the BSOD is independently estimated for both the current and constant prices. Imports of breeding stocks are also considered in the estimates.
 
7. Intellectual Property Products (IPPs) is a new item included under Capital Formation.  It includes expenditures on research and experimental development (R&D), software and databases, mineral exploration, and entertainment, artistic and literary originals. They are collectively known as IPP’s since expenditures on these items or their value reflects the underlying intellectual property they embody. Estimates for IPP’s are based on the corresponding items in the Annual Survey of Philippine Business and Industry (ASPBI) of PSA and the R&D Survey of the Department of Science and Technology (DOST).  Preliminary estimates are based in the indicators related to these expenditure items.  At constant prices, the most appropriate price indices related to the IPP’s are used as deflators.
 
8. For changes in inventories, inventory data of selected agricultural commodities by region are available from the BAS, National Food Authority (NFA) and Sugar Regulatory Administration (SRA). The inventory of establishments by region is available from the Quarterly Survey of Philippine Business and Industry (QSPBI) of PSA.  For the other sub-sectors that do not have actual regional inventory data, appropriate indicators for regional distribution are used to obtain the regional estimates of changes in stocks.  For crude oil and petroleum, the available regional storage capacity from the Regional Oil Downstream Facilities of the Department of Energy (DOE), and regional Maintenance and Other Operating Expense (MOOE) from the COA for the Government sector were used as indicators to allocate the national estimates into regions. The deflators used for the constatn price estimates are the appropriate prices/price indices from BAS, DOE, PSA and the estimated IPIN for GFCE.
 
9. In the absence of data on regional trade flow, net export was derived as a residual item.  Hence, net export refers to the combined effect of the income flows between regions, the commodity flows between regions and the rest of the world.  Net Export no longer includes the monetization/demonitization of gold. This item is treated as a financial asset under the financial account. Validation is made using the Foreign Trade Statistics (FTS) and commodity flow data of the PSA.
 
 
GROSS REGIONAL DOMESTIC EXPENDITURE

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