SA economy much bigger than previously estimated

Source: News24

South Africa’s economy is much bigger than previously estimated, Statistics South Africa (Stats SA) found following a review of the size, structure and performance of the economy. Last year, the economy was around 11% larger.

It published updated estimates of the country’s gross domestic product (GDP), which found that the government services sector is now considered smaller than previously estimated – and that the contribution of personal services was much bigger.

“Education and health activities that were previously classified under government have been reclassified under personal services, as a result of improved methodology,” Statistics SA said.

“The improvements in methodology and classification resulted in economic activity being more accurately linked to the industry where the activity takes place. On the production side, education and health services are now correctly treated as part of personal services rather than general government.”

This means that the contribution of general government to the economy is down by 45% (in the new base year of 2015), and personal services up by 206%.

Stats SA also found that the finance, real estate and business services sector – still the biggest industry in South Africa – was 26% larger than previously estimated.

This is because accurate data about South Africa’s use of technology and computer services, as well as other business services, were incorporated. Also, Stats SA also now has improved methods to estimate owner-occupied housing.

The survey also found that household expenditure was 16% higher than estimated, with spending on recreation and culture as well as restaurants and hotels much more than previously calculated. Spending on food was lower than estimated, however.

The newly revised estimate of GDP in 2020 is R5.521 trillion, an increase of 11% compared with the previous estimate. The annual growth rate for 2020 was revised from -7.0% to -6.4%. In the ten years between 2011 and 2020, the percentage difference between the previous and revised levels averaged 9.6%.

The new estimates have replaced the old base year (2010) – used to compile GDP estimates in constant prices – with a new base year of 2015. In the new base year of 2015, the economy was more than 9% larger than previously thought.

Most countries revise their GDP calculations regularly. The average increase between previous and revised GDP estimates across OECD countries was 3.8% in 2010. Latin America recorded an average increase of 8.8%, while Nigeria found that its economy was about 60% to 90% during its latest GDP overhaul.

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