South Africa Rebases GDP, Says Economy Expands 11%
South Africa has rebased its gross domestic product (GDP) survey, with the new data showing the economy was 11% bigger in 2020 than in the previous estimate, the statistics agency said on Wednesday.
According to Statistics South Africa, real GDP grew by 4.6% on a seasonally adjusted and annualised quarter on quarter basis in the first quarter of 2021. However, GDP contracted by 2.6% year on year.
The country takes the move amidst growing pressure in the economy that has been worsened by the outbreak of the pandemic last year, quickly ahead of Nigeria’s planned economic rebasing.
According to some economists, most governments overhaul their GDP calculations every few years to reflect changes in output and consumption, bringing forward the “base” year against which they compare their latest output figures.
It is noted that the exercise can lead to big one-off changes in estimates of the size of the economy. South Africa’s national accounts will be benchmarked and rebased to the year 2015 from 2010 as part of the latest regular revision, a process carried out every five years.
Statistics South Africa estimated the size of the economy at 5.52 trillion rand or the United States dollar equivalent at $370 billion in 2020, up from 4.97 trillion rand previously.
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Despite the increase, Africa’s most advanced economy still lags behind Nigeria, which at 154.25 trillion naira or $375.3 billion in 2020 according to the National Bureau of Statistics (NBS) was the continent’s biggest.
The rebasing has also led to revisions of South Africa’s past economic growth numbers, with 2020 GDP contracting 6.4% compared with a 7% contraction before the rebasing.
Improvements in methodology and classification resulted in the economic activity being more accurately linked to the industry where the activity takes place, Stats S.A. said.
“On the production side, education and health services are now correctly treated as part of personal services rather than general government,” the agency said.
“Trading entities from local government institutions are now also included in personal services.”
These reclassifications, along with new datasets, reduced the contribution of the general government to the economy in the 2015 base year by 45%, while increasing the contribution of personal services by 206%.
Another notable change was in the finance, real estate and business service industry, whose contribution increased by 26%, largely due to the inclusion of business services that were previously not surveyed.
South Africa is struggling to regain momentum after its already weak economy was dealt a further blow by the COVID-19 pandemic. The statistics agency is scheduled to give economic growth figures for the second quarter of 2021 on Sept. 7.
Fitch Solutions expects real GDP to expand by 3.5% over 2021 as a whole, as against a 7.1% contraction in 2020. It said the country’s purchasing managers’ index (PMI) data point to the economy gathering momentum in the first months of 2021, with manufacturing PMI rising from 50.9 in January to 57.4 in March, and 57.8 in May.
There will be a substantial year on year rebound in growth in Q2-2021 particularly, reflecting base effects from the depth of the contraction (of 17.5%) a year previously, analysts said.
South Africa Rebases GDP, Says Economy Expands 11%
