Sector Accounts provide a full sector breakdown of the nominal GDP according to the expenditure and income approaches. According to the expenditure approach, the nominal GDP can be decomposed as follows:
(I) GDP = Final consumption + Investment + Exports – Imports+ Gross Operating Surplus
= Hholds' final consumption + Hholds' investment + Govt final consumption + Govt investment + Business Investment + Business changes in inventories + Net exports + "Others"
Where "Hholds", "Govt" and "Business" hold for "Households", Government" and "Non-financial corporations" respectively. "Investment" holds for "Gross Fixed Capital Formation" in NA terms. "Others" gathers the following "minor" items: Changes in inventories and investment of financial corporations, Changes in inventories of Hholds.
Hholds' final consumption can be further decomposed into Hholds' gross disposable income (GDI) and Hholds' gross saving. Equation (I) then becomes:
(II) GDP = Hholds' GDI – Hholds' gross saving + Hholds' investment + Govt final consumption + Govt investment + Business Investment + Business changes in inventories + Net exports + Others
Equation (II) shows how GDI growth and the saving behaviour of households impact on the nominal growth of GDP. Hholds' GDI can itself be decomposed into its main components, namely:
- Gross wages - Gross Operating Surplus - Net property income - Net social benefits – income taxes
This leads to equation (III) below:
(III) GDP = Hholds' gross wages + Hholds' gross operating surplus + Hholds' net property income + Hholds' (net social benefits – income taxes) – Hholds' gross saving + Hholds' investment + Govt final consumption + Govt investment + Business Investment + Business changes in inventories + Net exports + Others
Where "Others" now include Changes in inventories and investment of financial corporations, changes in inventories of Hholds and Other current transfers (net) of Hholds.
The chart provided above builds on equation (III) to provide a breakdown of the quarterly growth of GDP in seasonally adjusted terms. The thick line indicates the quarterly growth of nominal GDP whereas each box provides the contribution of the component concerned. The contribution of component X to the growth of GDP in quarter Q is calculated as follows:
Contribution (X) = (XQ – XQ-1)/GDPQ-1
Note: the above breakdown is provided to analyse the contribution of sectors to the nominal growth of GDP. The latter is derived in the framework of the compilation of the European quarterly sector accounts and may differ from the data published by Eurostat in news releases on quarterly national accounts due to different methodologies applied in compiling the European aggregates (keeping/withdrawing intra-euro area flows and resulting asymmetries, direct vs. indirect seasonal adjustment) and/or different vintages.
