26 February, 1999

Inquiries: Ms Eeva Hamunen +358 9 1734 3385, Ms Taru Sandström +358 9 1734 3350
Mr Olli Savela +358 9 1734 3316
E-mail: skt.95@stat.fi
Director in charge: Mr Markku Suur-Kujala

New calculation method diversifies the description of national economy

The Finnish system of national accounts is undergoing a reform. The revised definitions and delimitations will raise the value of the gross domestic product. The revision will yield a more diversified picture of the domestic product and make the calculations more comparable.

Statistics Finland has re-calculated the national accounts data for the years 1990 to 1997. At the same time, the base year for calculations at fixed prices was changed to 1995. Calculated with the new method, Finnish gross domestic product in that year was approximately two per cent higher than it was calculated with the old method.

Increase in domestic product

The revised definition of investments will increase domestic product most. Computer software and other intangible fixed assets, which were previously treated as current expenses, will now also be included in investments. Because of this change, the level of capital formation in the total national economy is in the nineties 6 to 11 per cent higher than previously calculated.

The proportion of the public sector included in the domestic product will go up by approximately one percentage point to 19.9 per cent in 1995. The value added of public activities will now include depreciation, or consumption of fixed capital, calculated on the basis of investments in the infrastructure, such as roads, bridges, etc.

Consumption is examined more widely than before by introducing alongside consumption expenditure the parallel concept of actual final consumption. In addition to the consumption expenditure paid for by the households themselves, households' actual final consumption will, for example, also include health and educational services produced by the public and non-profit sector for private individuals. General government's actual final consumption is comprised of the collective services it produces, such as public administration and national defence. Actual final consumption makes it easier than before to compare, for example, two countries where health care is arranged on the private basis in one and as a public service in the other.

Calculation to be harmonised in the whole of the EU

The reform of the Finnish National Accounts is connected with the introduction of the global accounting recommendation, SNA93, approved in 1993, and with the European System of Accounts (ESA95) relating to the Member States of the EU. Domestic product calculations will be revised according to uniform principles in all the Member States of the EU by the end of April 1999.