The Report on the Observance of Standards and Codes data module provides an assessment of Japan’s macroeconomic statistics against the Special Data Dissemination Standard, complemented by an assessment of data quality based on the IMF’s Data Quality Assessment Framework, July 2003 version. The assessment reveals that the data-producing agencies in Japan adhere to the principle of objectivity in the collection, processing, and dissemination of statistics. They demonstrate professionalism and are transparent in their policies and practices. Data are protected by strict measures of confidentiality throughout the data-producing agencies.

Abstract

The Report on the Observance of Standards and Codes data module provides an assessment of Japan’s macroeconomic statistics against the Special Data Dissemination Standard, complemented by an assessment of data quality based on the IMF’s Data Quality Assessment Framework, July 2003 version. The assessment reveals that the data-producing agencies in Japan adhere to the principle of objectivity in the collection, processing, and dissemination of statistics. They demonstrate professionalism and are transparent in their policies and practices. Data are protected by strict measures of confidentiality throughout the data-producing agencies.

I. Overall Assessment

1. Japan has been subscribing to the IMF’s Special Data Dissemination Standard (SDDS) since July 3, 1996 and started posting its metadata on the Dissemination Standards Bulletin Board (DSBB) on November 5, 1996. Japan met the SDDS requirements on June 9, 2000 and is currently in observance of the SDDS. It meets the SDDS specifications for coverage, periodicity, and timeliness. Japan exceeds the periodicity and/or timeliness requirements for most real and external sector data. It takes a timeliness option1 for general government operations data; periodicity and timeliness options for data on central government operations; an “as relevant” provision2 for the analytical accounts of the banking system, owing to its extensive bank branch network; and a calendar flexibility option for the international investment position. The SDDS data categories are disseminated on Japan’s National Summary Data Page (NSDP), which is included on the DSBB website and is updated on a timely basis. Appendix I provides an overview of Japan’s dissemination practices compared to the SDDS.

2. This Report on the Observance of Standards and Codes (ROSC) data module contains an assessment of Japan’s national accounts (NA), consumer price index (CPI), corporate goods price index (CGPI),3 government finance statistics, monetary statistics, and balance of payments (BOP) statistics. The assessment is based on the IMF’s Data Quality Assessment Framework (DQAF), July 2003 version. Section I presents the mission’s main conclusions according to the DQAF prerequisites and five dimensions of data quality. Section II provides a summary assessment of the six datasets, based on a four-point scale, and an overview of the main characteristics of the datasets assessed. Section III covers the staff’s recommendations. The authorities’ response to this report and a volume of Detailed Assessments are presented in separate documents.

Prerequisites of quality

3. Various data-producing agencies are involved in producing the datasets covered in this report, reflecting the decentralized organization of Japan’s statistical system. The Economic and Social Research Institute (ESRI) produces the national accounts; the Ministry of Internal Affairs and Communication (MIC), the consumer price index; the Bank of Japan (BOJ), the corporate goods price index, and the monetary statistics. The MOF, which is responsible for the balance of payments statistics, entrusted the BOJ with the compilation of these statistics. The general government statistics are not compiled as a distinct statistical output (with revenues, expenditures, deficit, and financing); they are produced only as a sector of the national accounts. The responsibility to compile the datasets is governed by legislations that are specific to each relevant agency, with the CPI and CGPI also subject to the Statistics Law (because they are collected from survey sources). Although there is no legal requirement to do so, the datasets are widely disseminated, reflecting Japan’s strong dissemination culture.

4. The coordination of Japan’s statistical system includes elements such as the Statistics Law and the Statistical Reports Coordination Law, but these apply only at the survey collection level. Also, the compilation of the input-output tables is conducted in cooperation with several departments. Enhanced coordination efforts should be pursued, especially to improve the national accounts and balance of payments statistics.

5. Recognizing the critical need for effective coordination in a decentralized setting, Japan’s Committee for Promotion of Economic and Social Statistics produced in June 2005 a report entitled Structural Reform of Government Statistics. The reform envisaged by the Committee would help not only to strengthen, but also to place coordination at the heart of, Japan’s statistical system, enhancing synergies across statistical activities.

6. Resources are generally adequate for statistical production. However, the staffing of the national accounts department in the ESRI is somewhat low for operational and developmental purposes, limiting, for instance, coordination with other data agencies. Throughout ministries, good procedures support data compilation continuity. Staff rotation, however, may hinder developing and maintaining statistical expertise, which is important to further advancing statistics at both the domestic and international levels.

7. There is a strong awareness of the importance of meeting users’ needs, as evidenced, among other things, by the Advisory Committee for National Accounts (ACNA) and the quarterly meeting of users of the balance of payments.

Assurances of integrity

8. The data-producing agencies adhere to the principle of objectivity in the collection, processing, and dissemination of statistics. They demonstrate professionalism and are transparent in their policies and practices, with extensive documentation and dissemination of their policies and practices. There are laws and guidelines for staff on ethical conduct, and data are protected by strict measures of confidentiality throughout the data-producing agencies. Within agencies, the delineation of statistical functions is promoted through, for instance, formalized restrictions on internal government access to data for NA, the CGPI, and the monetary statistics. It would be useful if similar measures could be adopted for BOP and the CPI to further reflect the strong tradition of impartiality in the statistical production of these datasets.

Methodological soundness

9. Most of the six macroeconomic datasets under review are compiled according to internationally accepted statistical concepts and definitions, scope, classification and sectorization, and bases for recording.

10. The annual NA are produced—that is to say, compiled and disseminated—partly from the production and expenditure side and partly from the income side; this conforms to international guidelines. The quarterly accounts, which until 2002 were compiled only on the basis of final expenditures, are now also compiled using the supply approach. (However, the quarterly dissemination is still limited to the expenditure approach, preventing users from obtaining a full overview of the short-term development in the economy). Furthermore, the system treats the consumption tax according to the gross system since the source data are valued according to this concept (the main problem lies with the practical difficulties of removing the tax from the final expenditure items to obtain a correct measure of GDP at market prices). Transparency of the compilation methodology is noteworthy, with exhaustive and clear description of all deviations from the System of National Accounts 1993 (1993 SNA).

11. Within the NA, the general government sector accounts generally follow the national accounts guidelines through adjustments to the cash transactions in order to accrue certain transactions. As noted under the Prerequisites section there is no comprehensive statement of general government with regards to revenues, expenditures, deficit, and financing; and no agency is in charge of producing these statistics.

12. Both price indices broadly follow internationally accepted guidelines. However, the scope of the CPI would be further enhanced if one-person households were included in the expenditure estimates for weights. When the primary wholesalers play a critical role in setting the prices, the CGPI is valued at wholesale level, and not ex-factory as required by international guidelines for an output PPI.

13. For monetary statistics, the adoption of the Monetary and Financial Statistics Manual (MFSM) international guidelines would be enhanced if a Depository Corporations Survey were compiled. Furthermore, the monetary survey excludes Japan Post and cooperative financial institutions, although these institutions are covered in the broader monetary aggregates as well as in the flow of funds accounts.

14. Japan’s BOP statistics are consistent with the conceptual framework of the IMF’s Balance of Payments Manual, fifth edition (BPM5), though the sectoral classification differs somewhat from the BPM5.

Accuracy and reliability

15. In the NA, the change in 2002 to include supply-side source data, together with other methodological changes introduced at the same time, represented a significant improvement in compilation techniques for quarterly data and, thus, in the accuracy and reliability of the data. The change to the chaining method for the volume estimates in late 2004 was another important improvement in bringing the data closer to international guidelines. At the same time, some source data need strengthening (e.g., the coverage of the service industries and the coverage and timeliness of short-term statistics). Furthermore, adjustments are made to align government source data with national accounts classification requirements. Overall, the limitations of data sources call for a greater reliance on revision studies to inform the statistical process, in particular, for the first preliminary version of the quarterly accounts.

16. The data sources for the two price indices are, for the most part, sound. There should be more emphasis on a systematic selection of establishments for pricing commodities for the CGPI, and of outlets for pricing items for the CPI. At the microeconomic level, data assessment procedures for the CGPI and item replacement procedures for the CPI are exemplary. Methods for treating temporarily missing items, seasonal items, and quality adjustment procedures require attention for both indices, as does the aggregation methods at both the elementary and higher levels, particularly for the CGPI. Consideration should also be given to more frequent updating of weights for both indices.

17. The data sources and statistical techniques for the monetary and BOP statistics are generally reliable and sound. However, in the BOP statistics, a need exists to capture international transactions that are no longer captured, following the introduction of the new reporting threshold for the international transaction reporting system.

Serviceability

18. Data for the six macroeconomic datasets are generally available with periodicities and timeliness that meet and exceed in certain cases SDDS requirements, with the notable exception of government finance statistics (where the SDDS periodicity and timeliness are not met) and, also, the analytical accounts of the banking system (where an “as relevant” option is used on account of the bank institutional setting). Revision policies and practices are generally well-established, although the period open for revisions should be extended for the BOP statistics. Consistency within and across datasets is adequate, but less so between the budgetary accounts and government finance data.

Accessibility

19. The six macroeconomic datasets are readily accessible. Metadata are produced in fine detail, especially for the NA and BOP statistics, and are easily available in print and on the Internet. There is every evidence of attention to detail in this respect. Contact details are included, and timely answers are provided to queries.

II. Assessment by Agency and Dataset

20. The results of the assessments of the quality of the six macroeconomic datasets under review are presented at the level of the DQAF elements, using a four-point rating scale (Table 1). For the relevant data-producing agencies, the prerequisites of data quality and the assurances of integrity (Dimensions “0” and “1” of the DQAF) are presented in tables 2ad; and for each dataset, the methodological soundness, accuracy and reliability, serviceability, and accessibility (Dimensions “2” to “5” of the DQAF) are shown in tables 3af.

Table 1.

Japan: Data Quality Assessment Framework July 2003—Summary Results1/

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Practice observed: current practices generally meet or achieve the objectives of the DQAF internationally accepted statistical practices without any significant deficiencies. Practice largely observed: some departures, but these are not seen as sufficient to raise doubts about the authorities’ ability to observe the DQAF practices. Practice largely not observed: significant departures and the authorities will need to take significant action to achieve observance. Practice not observed: most DQAF practices are not met. Not applicable: used only exceptionally when statistical practices do not apply to a country’s circumstances.

For dimensions 0 and 1, the agencies assessed are for national accounts, the Economic and Research Institute, Cabinet Office; for consumer prices, the Ministry of Internal Affairs and Communication; for government finance statistics, the Ministry of Finance; and for the producer price index (corporate goods price index), monetary and balance of payments statistics, the Bank of Japan.

Table 2a.

Japan: Assessment of Data Quality—Dimensions 0 and 1—Economic and Social Research Institute, Cabinet Office (ESRI)

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Table 2b.

Japan: Assessment of Data Quality—Dimensions 0 and 1—Statistics Bureau (MIC)

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Table 2c.

Japan: Assessment of Data Quality—Dimensions 0 and 1—Ministry of Finance (Government Finance Statistics)

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Table 2d.

Japan: Assessment of Data Quality—Dimensions 0 and 1—Bank of Japan

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Table 3a.

Japan: Assessment of Data Quality—Dimensions 2 to 5—National Accounts

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Table 3b.

Japan: Assessment of Data Quality—Dimensions 2 to 5—Consumer Price Index

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Table 3c.

Japan: Assessment of Data Quality—Dimensions 2 to 5—Corporate Goods Price Index

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Table 3d.

Japan: Assessment of Data Quality—Dimensions 2 to 5—Government Finance Statistics

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Table 3e.

Japan: Assessment of Data Quality—Dimensions 2 to 5—Monetary Statistics

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Table 3f.

Japan: Assessment of Data Quality—Dimensions 2 to 5—Balance of Payments Statistics

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III. Staff’s Recommendations

21. Based on the review of Japan’s statistical practices, discussions with the data-producing agencies, and discussions and responses from data users (see the Detailed Assessments volume), the mission has a set of recommendations. They are designed to further strengthen Japan’s statistical system for the compilation and dissemination of macroeconomic statistics and further increase Japan’s adherence to internationally accepted statistical practices. Some additional technical suggestions are included in the Detailed Assessments volume.

Cross-cutting recommendations

  • In line with the more general findings of the Committee for Promotion of Economic and Social Statistics, take steps to improve overall coordination of macroeconomic statistics.

  • Consider introducing legal authority to disseminate statistical information along the lines of that used in other countries.

  • Further formalize the delineation between the statistical and nonstatistical functions within data-producing agencies to maintain their strong traditions of impartiality.

  • Further promote staff statistical expertise through the review of current rotation practices.

  • Conduct revision studies to enhance the reliability of preliminary estimates and publish these studies.

  • Promote data consistency across the datasets, by systematizing consultation with data-producing agencies on methodological and data developments, both at the source data and statistical outputs levels.

National Accounts

  • Review the current level of staffing of the national accounts data given that it is somewhat low for operational and developmental purposes.

  • Further develop quarterly accounts from the production side with the view to disseminate these data.

  • Enhance the coverage of source data for service industries, in general, and of short-term statistics for the quarterly accounts.

Consumer Price Index

  • Expand the scope of the CPI to include one-person households with concomitant developments in the source data for doing so. Consider reviewing the sample design to validate the outlet selection.

  • Include the price of items “on sale” for seven days or less.

  • Review the use of the ratios of the averages as the main formula at the elementary level. Consider a Lowe index as the fixed basket index at the higher level of aggregation; also consider the more frequent updating of weights.

  • Review the treatment of temporarily missing items, seasonal goods and services, and quality adjustment procedures.

Producer Price Index

  • Replace output priced at the primary wholesaler with ex-factory prices.

  • Consider the use of a more systematic approach for the sample of establishments.

  • Review the treatment of temporarily missing items, seasonal goods and services, and quality adjustment procedures.

  • Replace the average of relatives with a geometric mean at the elementary level. Consider a Lowe index as the fixed basket index at the higher level of aggregation; consider the more frequent updating of weights.

Government Finance Statistics

  • Specify the responsibility for collecting, processing and disseminating GFS and develop working arrangements for data sharing and coordination among the relevant data producing agencies.

  • Compile an integrated set of statements (operating statements, statement of other flows, and balance sheet) for the general government according to international statistical guidelines, and disseminate widely.

  • Compile a monthly statement of sources and uses of cash for budgetary central government, and disseminate in accordance with SDDS requirements.

  • Improve the timeliness of source data for local government statistics.

  • Bring the timeliness of general government sector accounts and the periodicity and timeliness for central government operations into line with SDDS requirements.

Monetary Statistics

  • Develop a Depository Corporations Survey by expanding the coverage of the Monetary Survey to include Japan Post and cooperative financial institutions.

  • Collect source data on commercial banks and other deposit-taking institutions in a format that fully meets international statistical guidelines.

  • Disseminate monetary statistics within a one-month period from the end of the reference month.

Balance of Payments Statistics

  • While the MOF is responsible for the balance of payments data, identify the BOJ as the compiler of data to avoid the impression of MOF involvement in the data compilation.

  • Adopt more detailed sectorization to further conform to BPM5.

  • Develop additional sources for the data lost with the introduction of the new ITRS threshold, for example for trade in services.

  • Review the revision policy that does not permit changes to the data once they are finalized; and publish revision studies.

APPENDIX

Table 4.

Japan: Practices Compared to the SDDS Coverage, Periodicity, and Timeliness of Data

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Note: Periodicity and timeliness: (D) daily; (W) weekly or with a lag of no more than one week from the reference data or the closing of the reference week; (M) monthly or with a lag of no more than one month; (Q) quarterly or with a lag of no more than one quarter; (A) annually; and (…) not applicable.

Given that the data are broadly disseminated by private means, the timeliness with which official data are disseminated is not time critical.

Italics indicate encouraged categories.
1

Countries may use a limited number of options when not meeting specific SDDS requirements.

2

An “as relevant” provision allows a country to not fully meet the SDDS requirement for the data item in question.

3

The CGPI is assessed as a producer price index (PPI), since Japan uses the CGPI to fulfill the function of a PPI, and presents it as such on the IMF DSBB.