Methodologies of the Revised and Rebased PSNA
Gross Domestic Product is the sum of gross value added of all resident producer units.
Gross value added (GVA) is defined as the value of output less the value of intermediate consumption. Output is defined the goods and services produced by an establishment. It is equal to the value of sales adjust for the changes in inventories of finished goods, that is goods produced and ready for sale but not yet sold, or goods sold adjusted for sales of goods produced in an earlier period. Meanwhile, Intermediate Consumption consists of the value of the goods and services consumed as inputs by a process of production, excluding fixed assets whose consumption is recorded as consumption of fixed capital.
GDP is based on the concept of Gross Value Added (GVA). The production measure of GDP is derived as the as the value of output less intermediate consumption plus any taxes less subsidies on products not already in value of output.
Operationally, GDP at the production of the PSNA is compiled for the industries which allows the study of industrial activity in the economy and permits the compilation of supply and use tables and input-output tables. Sectoring of the industries is based 2009 Philippine Standard Industrial Classification System (PSIC). The aggregates, referring to Output and Intermediate Consumption, are neither asked in surveys or censuses. For instance, businesses do not directly measure their intermediate usage of goods and services; rather they record their purchases and the changes in inventories of fuels and materials. These are derived data from the specific items processed from the results of establishment surveys, household surveys and administrative data, as shown in Table 1.
Table 1. Production Items
Gross Output |
- Revenue from main activity
- Industrial services done for others
- Non-industrial done for others
- Trade margin on goods for resale
- Changes in inventory of finished products, goods for resale and work-in-progress
- Fixed assets produced on own account
- Other income
|
Less:
Intermediate Consumption |
- Materials and supplies
- Fuels purchased
- Electricity consumed
- Industrial services done by others
- Changes in inventory of materials and supplies
- Other intermediate cost
|
Gross Value Added |
|
GDP is the sum of the gross value added for each of the sixteen (16) industries in the PSNA, as described in statistical notations below:
Where: 
GDP = gross domestic product
GVA = gross value added
j = industry classification (i.e. AFF, MAQ MFG,…OS)
A. Production Approach of measuring GVA at industry level
Measuring GVA at the industry level takes into account both the goods and services produced by the organized industry and unorganized industry for a more comprehensive picture of the performance of the industries or the economy as a whole. The organized industry includes the establishments and the government as producers of market output, output for own use, and non -market outputs, while the unorganized industry includes those that are not part of the organized industry but also producers of output such as the households.

A.1. Organized Industry
Measuring GVA is done at the most detailed possible. It is computed at the 5-digit level of PSIC for each of the sub-industries in an industry and then summed up to derive the total GVA of the industry.

Where:
GVA = gross value added
GO = gross output
IC = intermediate consumption
i = sub-industry classification
m = number of 5-digit level PSIC in the jth industry
A.2. Unorganized industry
Goods and services produced not captured in formal establishment surveys like the ASPBI and CPBI as well as administrative data are also included in the estimation of GDP by indirectly estimation using the residual employment approach.
Using this approach, employment in the unorganized industry is derived as the residual of the employment of Labor Force Survey (LFS) and the CPBI for the benchmark year or the ASPBI for the non-benchmark years. The residual employment is multiplied to the per capita gross output of small establishments or those establishments with less than 20 employees in the ASPBI and CPBI to derive the gross output of the unorganized industry. Gross value added is derived by multiplying the resulting gross output to the gross value added ratio of small establishments.
The residual employment approach in measuring GVA of unorganized industry is shown below:

Where:
GVAunorg = gross value added of unorganized industry
GOunorg = gross output of unorganized industry
GVArsmall = gross value added ratio for small establishments
EMPunorg = estimated unorganized employment
Emplfs = total employment from the Labor Force Survey
Emporg = total organized employment from the establishment survey
Unlike in estimating the GVA of organized industry, estimating GVA of the unorganized industry is done at the more aggregate level, which the industry level, because of the limitations in terms of representativeness of the data.
B. Computing gross value added ratio
Gross value added ratio is a derived parameter indicating the amount of gross value added per unit of gross output. At the industry level, gross value added ratio is computed as:

Where:
GVAr = gross value added ratio
GVA = gross value added
GO = gross output of an industry
i = sub-industry classification
C. Derivation of GDP at Constant Prices
Constant price estimates of GDP are obtained by expressing values in terms of a base period. In theory, the price and quantity components of a value are identified and the price in the base period is substituted for that in the current period.
The 2018-based constant price estimation used the single extrapolation method. This is an improvement in the estimation methodology as compared to the single deflation method used in the 2000-based series. The operational methodology of the single extrapolation method is described below.
Single Extrapolation
This method means that the “output is deflated using an output price index.”1 The value added is extrapolated by using volume indicators, and the assumption is that there is a constant relationship in the output, intermediate consumption and value added in volume terms.
Operationally, the single extrapolation approach includes the following steps:
- The Gross Output at constant prices was derived by deflating the GO at current prices with an appropriate or closest price deflator as possible.

where
G0 cut= estimated GO at time t at current prices
G0 k t= estimated GO at time t at constant prices
G0 deft= price deflator for the gross output at time t
- The Gross Value Added (GVA) at constant prices is then computed by:

where:
G0 k t= estimated GO at time t at constant prices
GVA k t= estimated gross value added at time t at constant prices
GVA r2018= gross value added ratio in the base year 2018