Georgia: Technical Assistance Report-Producer Price Indexes Mission
IMF Staff Country Reports, May 22, 2020
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- Georgia: Technical Assistance Report-Producer Price Indexes Mission
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Bibliographic details
- Published: May 22, 2020
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513544892.002
Purpose and scope
- Mission objective: assist the National Statistics Office of Georgia (Geostat) with expanding the coverage of the producer price index (PPI) to additional services activities.
- Rationale: Expanded PPI coverage will facilitate more accurate measurement of real output generated from services activities in Georgia.
- Context: Services activities comprised 58.4 percent of 2018 gross domestic product on a value-added basis.
Key findings
- Improved PPIs will significantly enhance the accuracy of total measures of the size, growth, and productivity of the Georgian economy.
- Improved PPIs will provide policymakers with a clearer view of price development at the producer level, which may signal future changes in the cost of living for Georgian consumers.
- Geostat analysis indicated that prices for all carriers have historically changed at similar rates, making the consumer price index for air transportation an adequate estimator for producer prices in that context.
- Producer prices should ideally include sales to all buyer types, not just resident consumers.
Methodological recommendations
- For air transportation PPI, include domestic airlines only when constructing a producer price index, while recognizing that CPI for air transportation can serve as an adequate estimator given historical price behavior across carriers.
- Use unit value prices to capture sales to all buyer types. Unit value prices can be calculated as:
- total fare revenue generated from all passengers that flew in a specified class of service on all flights for a specified route, divided by this same number of passengers.
Policy implications
- Expanding services PPI coverage will improve measurement of services’ contribution to GDP and productivity, informing macroeconomic and sectoral policy decisions.
- Better producer-level price indicators can provide early signals of inflationary pressures that may affect consumer price indices and cost-of-living assessments.
Content in this bundle
- 1. Priority Recommendations