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MCIT developed a new price index (Deflator) for the communications and information technology (CIT) component of GDP in Egypt



MCIT has implemented a project in cooperation with the World Bank to construct a new price index for the CIT services in Egypt, which would act as a deflator for the CIT component of GDP. The project has taken place during the period (February - May 2008). The importance of this project came from the suspicion that the current deflator used for converting the value of current production of CIT services to real values underestimates the value of the real CIT component of GDP.
 
The objective of this project was to review and validate the CIT component of real GDP, in addition to the CIT sector growth rates after being deflated by a new index that consists of a representative basket of CIT services. This objective has been achieved through developing an alternative price index, with a conceptual basis that is more consistent with the current CIT services component of the GDP. This price index will act as a new deflator for the CIT component of nominal GDP; that will lead to new adjusted figures for the CIT component of real GDP.
 
The new index is a quarterly producer price index (PPI) for CIT services, that is based on a representative basket of the telecommunication services available in Egypt, starting from first quarter of the year 2002 to the present. The new index has four subcomponents: fixed line telecommunication services, mobile telecommunication services, internet services and postal services. Different types of services for each of those four subcomponents have been included in the index. Weights for the detailed items included in the index subcomponents were determined using revenues generated from each of them through sales of services. After the four sub-indices are calculated, one composite index has been compiled by giving weights to each of those four sub-indices based on the revenue generated from each of them.




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