ICP Regional Coordinators Meeting

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1. The regional activitiesFollowing the release of the final 2011 ICP results inFebruary 2014, the Western Asia Regional Officecompleted the following activities: Two missions to the National Bureau of Statistics in

the United Arab Emirates to discuss, launch and followup on the national project aimed at producing sub-national PPPs in UAE;

An innovative exercise for the computation of PPPestimates for the years 2012 and 2013 using methodsdeveloped by the Regional Office;

A regional workshop in Turkey – Istanbul to validatethe produced price and national accounts data, andthe release of the final PPPs for the years 2012 and2013;

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1. The regional activities (Cont’d)

Two missions to CAPMAS in Egypt to discuss, launch andfollow up on the national project aimed at producing sub-national PPPs in Egypt;

A mission to Sudan to conduct a national conference for therelease of the 2011 ICP results and the 2012 & 2013 PPPestimates, followed by a national workshop for launching anational project for the computation of sub-national PPPs;

Online release and promotion of the 2011 ICP Results;

Two special editions of the WA ICP Newsletters; the firstedition featured highlights from the Final Regional ICPWorkshop (Final results and booklet), while the secondedition featured highlights from the regional workshop forthe computation of 2012 and 2013 PPP estimates;

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All the post 2011 Round activities in Western Asia Region originated from

Sustain the capacity building benefits andcapitalize on the experiences gained in the2011 ICP Round, through the harmonizationof price statistics and National Accountsactivities and the production of regular PPPestimates in Western Asia region.

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However, achieving thisvision at the regional levelis not as simple as onemight hope, given theeconomical diversity ofcountries involved. Theprocess is very long,difficult and demanding,and will require massiveefforts from the RegionalOffice as well as theNational Statistical Offices.

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Thus, below is the outline of

On the Short Term:Provide a smooth transition between ICP Rounds bycomputing interim PPP estimations.

On the Medium Term:Produce sub-national PPPs by integrating ICP withnational CPI and National Accounts activities and assessthe feasibility of the exercise on the regional level.

On the Long Term:Produce sub-regional and regional PPPs on a regularbasis through the harmonization of Price Statistics andNational Accounts Activities.

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On the Short Term

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1. Overview

After the release of the 2011 ICP final regional results inFebruary 2014, the ICP Regional Office for Western Asiadeveloped a new methodology:

To guarantee the continuity of the ICP;

To provide the region’s countries with new and affordablemeans to produce accurate statistical indicators on aregular basis.

The participating countries welcomed this unique initiativeand provided all the required materials. Subsequently, theICP regional team organized a regional meeting in Istanbul inDecember 2014 to validate the submitted data and producethe PPP estimates for 2012 & 2013.

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2. The Computation Methodology

Prices National Accounts

HHC Special Surveys MORES

Our methodology is based on the ICP main components:

3. Prices - HHCIn order to facilitate the computation process and lighten the workloadimposed by the exercise on the National Statistical Offices:The Regional Office at ESCWA assumed the HHC data sectionThe RO requested and used the most detailed CPI data (2011 – 2013), which is most of thetimes not published (P2P mapping);

The RO carefully assessed the CPI lists and treated the items on individual basis;

The RO deliberately utilized ICP 2011 quarterly HHC data to:• Preserve reliability and seasonality;• Increase accuracy and precision.

Quarterly inflation rates were applied on the quarterly 2011 average prices;

The RO performed a thorough and systematic validation:• Guaranteeing more precision and accuracy by double checking;• Treating each item on an individual basis according to individual item specifications;• Checking outliers using the ICP diagnostic tools (Dikhanov / Skainov Tables);• Interpreting outliers by referring to CPI data and 2011 average prices;

The RO successfully produced New 2012(2013) HHC average prices sets

Prices – HHC: CPI ListsDetailed CPI Lists were requested to produce more accurate results

Prices - HHC: Validation (Seasonality)

4. Prices – Special SurveysThe Special Surveys price data were handled by the National Statistical Offices (NSO)NSOs focused solely on estimating the special surveys data. However, theirresponsibilities will increase during the future exercises to include the preparation ofHHC data;

The devised plan did not request any price collection or survey implementation, eachcountry was granted the freedom to apply the method it deemed adequate for theestimation of its price data;

New 2012(2013) Special Surveys data sets were produced

Machinery & Equipment

Construction

Private Education

Rentals

Government Compensation

4. Prices – Special SurveysMachinery & Equipment

• Development of a Machinery and Equipment Price Index (using ForeignTrade data and SITC Rev 4);

• The Global average changes of Metal Prices (IMF International FinancialStatistics);

• The Producers Price Index (PPI),The Wholesale Price Index (WPI);

• The Machinery and Equipment Price Index (MEPI);

• The Cost of Living Index;

• The Consumer Price Index (CPI);

• Trade Statistics;

• Field Data Collection: Specialized Agencies, Suppliers, ... (in some cases itreached 95% of M&E item List).

Private Education

•The Consumer Price Index (CPI);

•The Cost of Living Index;

•National Statistical Offices databases;

•Contacting several qualified private tutors;

•Field Data Collection (Schools, Universities, Teaching and Learningcenters).

4. Prices – Special SurveysRentals •The Consumer Price Index (CPI) and the Cost of Living Index.

Government Compensation

•Human Resources Management Law and National Salary Scales (44Occupations – 4 Levels of experience).

Construction •The Consumer Protection Directory – Ministry of Industry & Commerce(Construction Materials);

•The Consumer Price Index (CPI);

•National Oil & Gas Authority;

•Electricity and Water Authority;

•Labour Market Regulatory Authority;

•Ministry of Municipalities Affairs and Urban Planning;

•The Producers Price Index (PPI);

•The Wholesale Price Index (WPI);

•The Construction Input Cost Index;

•The Cost of Living Index;

•Development of an Annual Weighted Average of sub-indices;

•Field Data Collection: Contractors, Engineering Consulting firms, …

5. National AccountsThe National Accounts component requiring the breakdown of GDP expenditurewas handled by the NSOs under the supervision of the Regional Office

Focus was on using MORES as the main tool for archiving the estimation of thedetailed breakdown of the expenditure data;

GDP expenditure weights were also verified and validated during the regionalworkshop, and expenditure patterns were crosschecked not only acrosscountries, but also across the three years for the same country;

This activity supported the documentation of the methodology used tobreakdown the GDP for 2012 and 2013 through MORES and using theexpenditure approach.

New 2012(2013) expenditure weights were thoroughly estimated

The RO successfully produced New 2012(2013) HHC average prices sets

New 2012(2013) Special Surveys data sets were produced

NEW 2012(2013) SF01

New 2012(2013) weights were thoroughly estimated NEW 2012(2013) SF06

Updated Exchange Rates and Population figures were used

NEW 2012(2013) SF05 & SF07

Western Asia is the first region to compute 2012 and 2013 PPP results

2011, 2012 and 2013 Regional ResultsPPP variations (2012/2011 and 2013/2012) – Oman as base

2011, 2012 and 2013 Regional Results

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Bahrain Egypt Iraq Jordan Kuwait Oman Palestine Qatar SaudiArabia

Sudan UnitedArab

Emirates

Yemen

Price Level Index - GDP Level (Region=100) 2011 2012 2013

2011, 2012 and 2013 Regional Results

Per Capita Expenditure Shares (Region =100)

6. Added ValueThis exercise performed by the RO at ESCWA is a Double-Folded exercise:

1st Fold - It serves the Short term objective: The computation of 2012 & 2013 PPPs 2nd Fold - It serves the Long term objective: ICP – CPI Integration and Harmonization

• Promoting a strategic approach for the integration of CPI and ICP activities;• Reviewing existing ICP and CPI item lists and constructing a harmonized list;• Supporting data quality processes.

Locating the statistical weak spots and limitations of some countries;

Enhancing the statistical capacity of countries in the areas of price statistics and NationalAccounts, in addition to keeping the PPP concept alive;

Giving Western Asia the opportunity to:• Build the human capital;• Share the know – how;• Enhance the national statistical systems.

A constructive national and regional exercise;

Allowing for linking with Eurostat/OECD and the rest of the world to arrive at more reliableglobal PPP estimates.

7. A Promising Alliance

The 2011 ICP round has very much enhanced thecooperation and coordination between Africa (AfDB) andWestrn Asia (ESCWA).Currently, and as the number of countries in commonincreases, we aim at increasing this level ofcollaboration, share the gained experiences, andharmonize the methodologies in order to arrive atimproved mutual outcomes.

On the Medium Term

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1. The Strategy… in brief As is known, PPP production requires countries to collect price data

for a series of identical items, through a preset structured productdescription;

Given the high cost of this process, and in order to maintain aregular PPP production between ICP rounds, we aimed at exploringand assessing the idea of merging ICP components within theregular CPI work;

Choice fell on couple pilot countries to start with and exploit the ideaupon, as they resembled a regional nature;

Pilot case studies will simulate the execution of the project on areduced scale in order to assess its feasibility on the sub-regional and regional levels. Should the trial be successful, theproject will be attempted on a larger sub-regional/regional scale andwill thus extend to the Harmonized CPI initiative on the long run.

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2. The BenefitsBesides serving as a Pilot Case Study, this exercise will bringmany benefits to the implementing countries: Help local statistical offices enhance their capacity in the fields

of Price Statistics and National Accounts;

Provide a solid estimation of the cost of living in each of thecountry’s governorates/regions;

Allow local authorities to better assess their comparativegrowth and advantages, their national competitiveness, andpatterns of specialization among industries;

Allow policy makers to better design and evaluate their tax andsubsidy policies to better attract investments and industries;

Allow individuals to make a real assessment of income andpurchasing ability when relocating from one region to the otherfor work purposes (real salary assessment).

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3. Pilot Exercise: Case of UAE The United Arab Emirates is a

federation of seven Emirates(equivalent to principalities), eachgoverned by a hereditary emir whojointly form the “Federal SupremeCouncil”. The Regional Office (RO)exploited these unique geographicand political structures for theimplementation of a Pilot Case study.

The UAE was considered as a regionand it’s governorates were consideredas independent countries;

This allows the simulation of theexercise on a reduced scale beforeattempting to implement it on theregional level.

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3.1. Case of UAE: Activities

The WA Regional Office contacted the National Bureau ofStatistics (NBS) and compiled basic information regardingthe CPI and National Accounts processes in UAE.Subsequently, the RO performed two visits to NBS:

The first meeting was held in July 2014 and focusedmainly on the price data and the CPI product lists ineach of the seven UAE emirates;

The second meeting was held in December 2014 andtackled the National Accounts part in order to provideGDP expenditure breakdown over 155 basic headingsfor each of the emirates through the MORES.

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3.2. Case of UAE: Main FindingsFollowing the two visits to NBS, the main findings are:

The CPI is compiled independently in each of the sevenEmirates;

The CPI base year in UAE is 2007 for all seven Emirates;

3 CPI Lists exist in UAE (one for each of Abu Dhabi, Dubai,and the Northern Emirates). CPI has 12 groups, and thelists are identical at the Basic Heading level. However, atthe item level, the products differ from one list to the other;

Education, Housing and Health are covered by UAE's CPIbasket. The estimation of Construction, M&E andGovernment Compensation data needs additional effort butshould not pose a challenge;

National weights for 155 Basic Headings are needed foreach of the seven Emirates. However, these disaggregatedfigures are not available.

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3.3. Work Progress The regional Office unified the 3 CPI lists used in UAE.

The unified list was devised with the cost factor inmind. Thus, commonalities in the lists were exploited tothe maximum in order to minimize additional work;

Based on the unified list, the Regional Office createdthe ICP Kit Master list for UAE, allowing NBS toproceed with the data entry and validationprocedures;

The Regional Office and NBS agreed on the timingand recurrence of the Special Surveys datacollection activities;

The Regional Office agreed with NBS on themethodology which will be applied to provide the GDPexpenditure breakdown.

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4. Other Ongoing Pilot Studies

Parallel to the Pilot Case exercise that is beingimplemented in UAE, the WA Regional Officeinitiated a similar study for Egypt and performed twomissions (June 2014 and February 2015).

Moreover, the Regional Office suggested to launchan the same Pilot exercise in Sudan. This initiativewas presented to the Central Bureau of Statisticsduring the national ICP workshop in Khartoum inFebruary 2015.

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On the Long Term

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The way forward

A regional project has been developed bythe Regional Office under the title:

‘The Harmonization of Price Statistics andNational Accounts Activities and Productionof Biennial PPP Estimates in Western AsiaRegion’.

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