Revised Standard to Expand Japan's GDP by 15 T. Yen

Tokyo, Aug. 28 (Jiji Press)--Japan's nominal gross domestic product is expected to be boosted by an estimated 15 trillion yen, or about 3 pct, mainly due to the addition of research and development investment in the coming revision of the data compilation standard. Japan's GDP will be calculated under the new standard beginning with July-September data, which will be released in December. The GDP standard is revised every five years. The coming revision will follow the System of National Accounts 2008, a U.N. statistical framework for compiling measures of economic activity. In countries that have already adopted SNA 2008-based new standards, including the United States and Germany, GDP has been pushed up by about one to 4 pct. The new standard will feature the inclusion of R&D investment in GDP data. R&D spending, regarded as expense for producing goods and services, has been excluded from GDP data. Under the new standard, however, R&D spending will be redefined as investment to generate profits over years, like investment in production equipment, and counted into GDP. Japan's annual R&D expenditure is estimated at more than 15 trillion yen, accounting for about 3 pct of its nominal GDP, which totals some 500 trillion yen. Also under the new standard, patent royalty payment will be counted into GDP. Likewise, acquisition of defense equipment, including tanks and warships, will be included as the government's fixed capital or inventory investment. The expected increase in nominal GDP will likely help the government of Japanese Prime Minister Shinzo Abe as it aims to achieve 600 trillion yen in nominal GDP on an annual basis by around 2020. Still, the larger GDP stemming from a revision to the compilation standard will not necessarily mean higher economic growth in Japan. "There will be no change in my assessment that the economy is at a standstill," a private-sector economist said.Copyright JIJI PRESS LTD.