Why do countries revise their national accounts?
The accuracy of national accounts estimates and their comparability across countries depend on timely revisions to data on GDP and its components. The frequency of revisions to GDP data varies: some countries revise numbers monthly, others quarterly or annually, and others less frequently. Such revisions are usually small and based on additional information received during the year. However, in some cases larger revisions are required because of new methodologies and changes to the base year. The new base year should represent normal operation of the economy—it should be a year without major shocks or distortions.
Comprehensive revisions of GDP data usually result in upward adjustments as improved data sources increase the coverage of the economy and as new weights for growing industries more accurately reflect their contributions to the economy. These revisions may cause breaks in series unless they are applied consistently to historical data. For constant price series a break caused by rebasing can be eliminated by linking the old series to the new using historical growth rates. But for nominal GDP data a break in the time series cannot be avoided unless the statistics office revises historical series. Because rebasing real GDP and its components leaves the pre−base year current price series unchanged, the GDP deflator calculated from these two series is skewed for pre−base years. Other series affected by the break in GDP are fiscal indicators expressed as a percentage of GDP. When nominal GDP is revised upward, the ratio of revenue and expenditure to GDP look smaller than previously reported.