NEW EUROPEAN RULES FOR CALCULATING BULGARIA’S GDP

Following recommendations by the European Commission, in September the National Statistical Institute of Bulgaria will start including revenues from underground activities when calculating GDP. Since 2010, a number of underground activities have been taken into account and are part of the country's GDP. Usually the share is not greater than 13% and the term grey economy includes illegal trade, working without an agreement, getting tips, etc.

This year the statistical institute will start including data on prostitution and drug distribution in their calculations. The GDP of some European countries rose by 2 to 6% after these data started to be included. The National Statistical Institute will start using the new rules in October. The methodology is called "European System of Accounts 2010" which requires a wider set of data on the hidden economy to be included in calculations.

The news was announced at a press conference by Elka Atanasova - head of "Macroeconomic Statistics" at NSI. She explained that the institute will not be making separate statistical surveys related to drugs and prostitution, but will use information provided by national and international institutions. Initial estimates have already been completed and will be announced soon. Except for prostitution and drugs, data on the so-called imputed rent will also be collected.

Various incomes that don’t take the form of monetary payments will be kept in mind. They include employers’ expenses for employees’ mobile phones, clothing, food vouchers, etc.  

What exactly is "imputed rent" and why is it an important component when comparing the lives of citizens in the EU? More from expert Elena Bakalova: 

“Assessment is necessary because in the former socialist countries a great number of people own real estates. In western countries, people who live in their own homes are 45 percent, while in Bulgaria 96 percent of people own a home. In order to have comparability across countries we assume owners should be evaluated according to the actual rent they would have paid if they did not own the home.

This amount is included in the GDP of all European countries. By 2005 various attempts were made to find a way to compare different countries. That was when the rules for calculation of the imputed rent were set. The European Commission has called on Bulgaria to even count garages and add them to the "imputed rent". This raises the value of housing assets held by households. Experts have already been working using the new methodology of the EC," Elena Bakalova says in conclusion.