GDP Calculation
Methodology

The methodological basis for the National Accounts of Georgia is the System of National Accounts 2008 (SNA 2008) — the internationally agreed standard developed jointly by the International Monetary Fund (IMF), the United Nations (UN), the Statistical Commission of the European Communities (Eurostat), the Organisation for Economic Co-operation and Development (OECD), and the World Bank.

Annual figures for 2018 were revised in accordance with SNA 2008, and the GDP time series for 2010–2017 was also updated to align with the revised methodology.

The SNA 2008 methodology is largely consistent with SNA 1993. The main differences relate to the treatment of globalisation effects on multinational corporation indicators and to revisions in the compilation of financial and capital accounts. Notably, under SNA 2008, expenditures on Research and Development (R&D) are classified as capital investment, whereas SNA 1993 treated them as current expenditures.

GDP at current prices is calculated using three internationally recognised approaches.

Under the production approach, GDP is derived as the sum of gross value added generated within the economic territory of the country by all institutional units, plus taxes on products and imports (VAT, excise duties and customs duties), less subsidies on products.

GDP calculation by the production approach is based on the National Classification of Economic Activities of Georgia (GNC 006-2016), which is aligned with the European standard Classification of Economic Activities — NACE Rev. 2.

The expenditure approach calculates GDP as the total final expenditures incurred by institutional units within a given period, according to the following scheme:

The income approach derives GDP as the sum of incomes earned by those institutional units directly involved in the production of goods and services within the country's territory during the reference period.

SNA 2008 recommends the quarterly calculation of real GDP growth indices. Real growth is measured relative to the corresponding period of the previous year, using GDP data expressed in constant prices.

Conversion of GDP to constant prices under the production approach is carried out using the method of double deflation — deflating total output and intermediate consumption separately by the relevant price indices for each type of economic activity, and then computing the difference. GDP at constant prices under the expenditure approach is derived by applying the corresponding price indices to each major expenditure category.

International methodology requires that the non-observed economy be measured as part of the GDP calculation process.

The non-observed economy is estimated by type of economic activity and covers activities, output, income, consumption and other economic transactions not captured by existing standard statistical sources, for any reason. Both direct survey methods and indirect estimation techniques are applied in its assessment.

The following data sources are used in the GDP calculation process:

• Quarterly and annual business statistics surveys. Databases are processed quarterly in the SNA format and serve as the basis for calculating total output by type of economic activity, incorporating estimates for the non-observed economy.
• Quarterly Household Survey data. Employment and household final consumption databases are compiled quarterly in the national accounts format.
• Price statistics data on producer prices, consumer prices, and export and import price indices.
• Quarterly and annual agricultural surveys.
• External trade statistics on exports and imports of goods.
• Data from the National Bank of Georgia (NBG):

  • Monthly income and expenditure data of commercial banks;
  • Monthly income and expenditure data of the National Bank of Georgia;
  • Balance of Payments data.
• Quarterly data from insurance companies.
• Monthly data from the Ministry of Finance (MoF) — consolidated budget revenues of central government and self-governing bodies (by tax type) and expenditures (by functional and economic classification), used to derive total public sector output; also includes taxes on products and imports (VAT, excise duties and customs duties).