Analysts expect GDP rebound, but raise concerns about new benchmarking

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Statistician-General Risenga Maluleke said the rebasing is to ensure GDP estimates remain relevant. Photo: iStock/Gallo Images
Statistician-General Risenga Maluleke said the rebasing is to ensure GDP estimates remain relevant. Photo: iStock/Gallo Images

BUSINESS


Stats SA will on Tuesday release revised GDP estimates for the first quarter and preliminary estimates for the second quarter of this year.

The agency recently rebased South Africa’s GDP “to ensure that the measurement of the GDP remains reflective of the South African economy and relevant, given structural changes that occur in the economy over time”.

Statistician-General Risenga Maluleke said the rebasing is to ensure GDP estimates remain relevant.

“Countries periodically make improvements to how national accounts are calculated. Rebasing and benchmarking of GDP estimates is done every five years.

“This is done to ensure that major changes in the structure of the economy are incorporated into the calculations and that the method of calculating GDP is aligned with the latest international standards,” said Maluleke.

He added that Stats SA would drop the focus on annualised growth and use 2015 as the new base year for the data.

“Rebasing was done in 1999, 2004, 2009 and 2014, but has taken a bit longer for the latest one because of the pandemic,” he said.

FNB economist Mamello Matikinca-Ngwenya said it had been more difficult than usual for analysts to make a call on GDP expectations, “given the revisions to the historic series as well as the absence of the June mining production figures”.

“Revised GDP estimates indicated that nominal GDP was 9.2% [or R371 billion] higher in the new 2015 base year than the previous GDP estimate.” 

“On average, between 2011 and 2020, the revised nominal GDP was 9.6% higher and 11% higher in 2020,” she said.

READ: Economic outlook for the year ahead: growth likely to be subdued compared to first quarter

She added that, while the revised GDP estimate from the latest benchmarking cycle reflects a significant expansion in the size of the economy, the upcoming GDP data poses challenges from a forecasting perspective.

“Therefore, to estimate second-quarter GDP growth, three key practical issues must be considered. First, we look at the variations between the revised and previous GDP quarterly growth estimates.

Second, the revised GDP data set did not come with first-quarter actual figures, as was the case with the previous GDP data set, and this poses a critical challenge.
FNB economist Mamello Matikinca-Ngwenya

“Last, we observe that seasonal factors from the revised GDP differ slightly from the previous GDP. This also needs to be considered in the second quarter of 2021 GDP estimate in the context of a pandemic-induced deep decline in the second quarter of 2020.

“But we expect quarterly growth to come in at 2.5% to 3% annualised in quarter two, slightly above the consensus forecast for 2% growth,” she said.

READ: SA set to feel growth squeeze

Busi Mavuso, the CEO of Business Leadership SA, said that Tuesday's GDP figures would likely reflect a rebound in the economy from the Covid-induced ravages of last year when the country was in hard lockdown.

However, she said, the global threat posed by the Delta variant of Covid-19, scientists predicting the fourth wave before year-end and the issue of vaccine hesitancy among some individuals are worrying.

READ: Don’t take a chance, take a jab

Analysts’ current estimates are still lower than the Organisation for Economic Cooperation and Development (OECD) projections. The organisation said South Africa’s economy will rebound by 3.8% this year and 2.5% next year.

The OECD had forecasted that growth would pick up in the second half of the year, driven by domestic demand and commodity exports.

It said the country’s household consumption would contribute significantly to growth as South Africa’s economy opens.

“However, the Delta variant infections remain a concern at a global level, forcing countries to impose lockdown restrictions on economic activity. Japan recently extended its emergency lockdown and infection rates are rising in South Korea, Malaysia, the Philippines, Vietnam and Thailand. Strict lockdowns have also been imposed in Australia and New Zealand,” said the OECD.


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