The Census and Statistics Department (C&SD) October 18 released the chain volume measures of the Gross Domestic Product (GDP) to replace the previous constant price measures. This is to gear with the latest international statistical guidelines on compilation of the volume measures of GDP.
The change in the volume measure of GDP is widely used as a macro-economic indicator of the real growth of the aggregate economic activity of an economy.
Compared with the previous constant price approach where the price structure as weights for aggregating the volume estimates of the GDP components is only updated once every several years, the new calculation method of chain volume measure is a more enhanced approach, as the price structure is updated every year, thus providing a better measure of the growth of GDP in real terms.
In introducing this methodology enhancement, the GDP real growth rate for the first half of 2007 was revised slightly downwards from 6.3% to 6.1%, and for 2006, from 6.9% to 6.8%. A relatively more significant revision was observed for the real growth rate of GDP for 2000 (from 10% to 8%) due to volatility in the price and volume movements of some of the GDP components. The five-year (2001 to 2006) trend growth of the volume of GDP was revised downwards from 5.6% to 5.4%. Experience in other economies indicates that such downward revisions are normal when chain volume measures are used instead of constant price measures.
In order to maintain comparability of the data series, backdating of historical series of the volume measures of GDP and its components based on the new calculation method was made. For the GDP and its expenditure components, backdating of the volume series was made for the past 20 years. Similarly, the entire volume series of the value added by economic activity were also re-calculated based on the new method and backdated to 2000.
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