EXPLANATORY NOTES
This index is based on monthly production data for 50
firms. Those in the manufacturing
sector were chosen to represent 75 percent of the total net monetary output of
that sector. Those under Electricity and Water represent 100 percent of the
monetary output of that sector.
Most firms supply information on the quantity of
goods produced, but, where output of different items varies considerably from
month to month, other types of indicators are used (e.g. consumption of
materials, person-hours).
The weighting of the index is done in 3 stages.
(a)
Items within
industries (e.g. shirts, shorts, etc., in the clothing industry);
(b)
Industries
within divisions (e.g. clothing within Textiles, Footwear and Clothing;
(c)
Divisions
within the "All Items" Index.
At the first stage, wherever possible, weights are
based on "value added". When an individual company produces more than
one product the value added is split between the products in the same
proportion as the gross value of sales of those products.
Once the item in each industry is aggregated, the
industry is weighted according to the proportion of its value added to the
total value added of the division to which it belongs. Some small companies
operate in industries not covered by any larger representative; in these cases
the value added was included in the total for the appropriate division. For
example, battery manufacture is included in "other manufacturing".
This means that the total weight for the division is increased by the
production of the additional industry. Note that this assumes that output in
these industries is changing in the same way as the output of the industries in
the rest of the division.
The main types of the goods covered by each industry
division are as follows:
(1)
Food,
Beverages and Tobacco: meat, dairy, grain mill, bakery products, edible oils,
sugar (domestic consumption), malt liquors, soft drinks and cigarettes.
(2)
Footwear,
Clothing and Textiles: woven cloth, shoes.
(3)
Other Goods
(mainly for final consumption): printing and publishing, packaging, industrial
chemicals (excluding fertilizer), rubber and plastics.
(4)
Products for
Building and Construction: cement, structural metal, machinery, equipment and
wood.
(5)
Export
Industries: tea manufacturing, post-auction tobacco processing and sugar
exports.
(6)
Electricity
and Water: electric power sent out and
water consumed.
The indices are the Laspeyres
"base-weighted" type, where prices are compared to a fixed base
period.
The weights are based on expenditure patterns of
households derived from the results of the Integrated Household Survey (IHS).
This was conducted from September 1997 to November 1998.
The categorization of the income groups
is base on the following scheme: High -Income, Medium-Income and low-Income
groups for the main urban areas of Blantyre, Lilongwe, Zomba and Mzuzu. The
income groups are equivalent to those derived in the Poverty Profile of Malawi
using IHS data with high income being those households belonging to the Ultra
Rich; low income being those households in the Ultra Poor Group and Medium
Income being those falling in between the two groups. For
rural areas, which are predominantly low income, only one set of weights is
computed.
These weighting patterns result in a total of
fourteen different price indices representing different groups; three indices
for each of the four urban areas, the composite national urban index, and the
national rural index.
This is the fifth series of trade indices published by
the National Statistical office (N.S.O), but the second of its kind using Broad
Economic Category with 2000 as the base year. Both unit value and quantum
indices are calculated using Laspeyres base weighted formula.
The import indices are
supposed to be calculated from seven out of eighteen groups of Broad Economic
Category (BEC). Thus:
(1)
Food and
Beverages
(2)
Industrial
Supplies
(3)
Fuel and
Lubricants
(4)
Capital
Goods
(5)
Transport
and Equipment
(6)
Consumer
Goods
(7)
Goods Not
Elsewhere Classified – This category exists in order to absorb the remainder of
goods, which do not fit in any of the above sub – groups. This category did not
qualify to be included in the trade Indices.
Every effort is made to select commodities with
monthly stable prices over the base year for computing the indices for both
imports and exports. Even so, changes in the unit values of imports and to a
lesser extent, exports may be partly attributable to quality changes and
classification issues, which are difficult to isolate. Also, during the run of
the index the structure of trade may change. Unlike imports, exports are
calculated from only three categories due to the nature of our economy in
Malawi. Included in the Export Trade Indices are:
(1)
Food and
Beverages
(2)
Industrial
Supplies
(3)
Consumer
Goods
It is not usually possible
to include all commodities entering into trade in the computation of trade
indices. Due to the nature of Malawi’s trade, it has been possible to include a
greater percentage of export commodities as compared to import commodities in
the computation of indices.