MEASURING THE

ECONOMY
BRYLLE MATTHEW JUNIOSA
BS ARCHITECTURE STUDENT
THE PHILIPPINE
ECONOMY
Expenditure
Approach

Expenditure approach sums up the expenses of the

institutional sectors: households, private corporations,
government corporations, and the general government
plus their expenditures in other regions of the world.
The GDP through the expenditure approach has the
following components:

page 3
 COMPONENTS OF 1. Consumption of Households Final Consumption
Expenditure. This is the expenditure on goods and
GDP EXPENDITURE services. It includes spending for: food and
nonalcoholic beverages; alcoholic beverages, tobacco;
APPROACH clothing and footwear; housing, water, electricity, gas
and other fuels; furnishing household equipment, and
routine household maintenance; health; transport;
communication; recreation and culture; education;
and miscellaneous goods and services.

page 4
 COMPONENTS OF
2. Investment of Gross Domestic Capital Formation.
GDP EXPENDITURE This is the expenditure by the businesses. The gross
capital formation has two main components: fixed
APPROACH capital and changes in stocks. Fixed capital include:
construction, durable equipment, breeding stocks,
and orchard development, and intellectual property
products

page 5
 COMPONENTS OF
3. Government Final Consumption Expenditure. This is
GDP EXPENDITURE the expenditure on goods and services by the
government. It includes the spending done by the
APPROACH government in the salaries and wages of public
servants and daily operations, basic services such as
education, health, etc. On the contrary, the transfer
payments done by the government are excluded.

page 6
 COMPONENTS OF
GDP EXPENDITURE 4. Exports. These are the expenditures on domestically

APPROACH produced goods and services by foreigners. The value

of exports is added in the computation of the GDP.

page 7
 COMPONENTS OF
GDP EXPENDITURE 5.Imports. These are the expenditures on foreign

APPROACH goods and services by domestic residents. The value of

imports is deducted in the computation of GDP.

page 8
 THE DIFFERENCE BETWEEN IMPORTS
AND EXPORTS IS CALLED NET EXPORTS.
THE VALUE OF NET EXPORTS CAN BE
EITHER BE POSITIVE OR NEGATIVE. IT IS
POSITIVE WHENEVER EXPORTS EXPORT
EXCEED IMPORTS ( TRADE SURPLUS) AND
IT IS NEGATIVE WHEN IMPORTS EXCEED
EXPORTS (TRADE DEFICIT)

page 9
Gross Domestic Product (Expenditure Approach)
Consumption of Household Final
Consumption of Expenditure (C)
+Investment or Gross Domestic Capital Fomation (I)
+Government Final Consumption Expenditure (G)
+Exports (X)
-Imports (M)
The table sums up the components of GDP (formula) using the expenditure approach

page 10
There is an additional item for the expenditure approach to GDP
accounting which is the statistical discrepancy. Statistical
discrepancy is not considered as an expenditure item. It is the value
of the discrepancy arising from the difference in the computations
between industrial origin and expenditure approaches. Statistical
discrepancies will be added to the expenditure approach whenever
the value of the GDP using industrial origin approach is greater
than the C + I + G + X – M. Otherwise, it should be deducted.
 Real Gross Domestic Product – Expenditure Approach for 2010
1985= 100, in million Php

Type of Expenditure 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Personal Consumption Expenditure 275,426 300,023 288,445 350,112
Government Consumption 28,725 30,463 23,368 21,329
Gross Domestic Capital Formation 72,586 72,045 63,662 75,986
Exports 151,895 196,065 220,118 153,456
Imports 154,342 181,447 197,340 217,042
Statistical Discrepancy -13,887 -32,434 -32.115 -42,086
Gross Domestic Prouduct 360,403 384,685 366,138 425,927

Source: NSCB
Gross Regional Domestic Expenditure (GRDE)
versus
Gross Regional Domestic Product (GRDP)
Gross regional domestic expenditure (GRDE) is based
on national income accounts which is broken down by
regions using the expenditure of resident institutional
sectors (personal consumption, investment, and
government consumption) plus their expenditures in
other regions including the rest of the world (net export)
Gross regional domestic product (GRDP) is initially done
in 1974 to measure the aggregate of gross value added
of all residents producer units of the three major
economic sectors which are agriculture , industry and
service.
Gross Domestic Product
Vs
Gross National Income
 Gross Domestic Product (GDP) is one of the ways in measuring the
performance of an economy. It represents the value of final goods and
services produced domestically. But if we are going to consider the
value of goods and services produced by Filipino citizens abroad, then
we dealing with Gross Domestic Income (GDI). It is defined as the value
of final goods and services produced domestically and abroad by
Filipino citizens. GNI was previously known as the Gross National
Product (GNP)

Gross National Income (GNI) = GDP ± Net Primary Income from Abroad
Net Primary Income (NPI) is the difference between inflows and outflows of income.
Inflows of income refer to the value compensation and property income that the
Philippine receives abroad. Outflows of income represent the value of compensation
and property income that is sent abroad. The formula of GNI as shown from the
previous slide is derived after adding or deducting NPI to GDP in order to derive the
value of GDP

When NPI is positive, inflows of income are greater than outflows, NPI will be added to
the value of GDP.

When NPI is negative, out flows of income are greater than inflows, NPI must be
deducted from the value of GDP.
 Gross Domestic Product, Net Primary Income, Gross National Income
1985=100, in million PhP

Year GDP NPI GNI

2003 1,085,072 86,359 1,171,431

2004 1,154,295 98,036 1,252,331
2005 1,211,452 108,548 1,320,000
2006 1,276,156 115,133 1,391,298
2007 1,366,625 129,406 1,496,031
2008 1,417,087 174,022 1,591,109
2009 1,432,115 222,821 1,654,936
2010 1,537,152 236,198 1,773,350
Source: NSCB
THANK
YOU