The economy is still in crisis, in spite of a fourth consecutive quarter growth

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Transport, storage and the communication industry made the largest contribution to GDP growth, at 6.9% in the second quarter. Photo: Supplied
Transport, storage and the communication industry made the largest contribution to GDP growth, at 6.9% in the second quarter. Photo: Supplied

BUSINESS


The South African economy recorded its fourth consecutive quarter of growth, expanding by 1.2% in the second quarter of 2021, Stats SA reported on Tuesday.

The GDP statistical release report shows that transport, storage and the communication industry made the largest contribution to GDP growth at 6.9% in the second quarter, a 0.5 percentage point increase.

The report adds that the personal services industry also increased by 2.5% and contributed 0.4 of a percentage point to GDP growth, and that the trade, catering and accommodation industries increased by 2.2% and contributed 0.3 of a percentage point.

Increased economic activity was reported in wholesale, retail and the motor trade and there was increased spending on catering and accommodation services. The agriculture, forestry and fishing industries also increased by 6.2% and contributed 0.2 of a percentage point to GDP growth.

Statistician-General Risenga Maluleke said personal services, which includes health-related activities, rose on the back of increased economic activity related to the second phase of the national Covid-19 vaccination programme that had kicked off on May 17, adding that another contributor to growth in personal services came from medical schemes that had recorded a rise in membership numbers.

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Stats SA also reported that trade increased by 2.2%, driven by a rise in economic activity across all trade sectors.

“The rise in trade activity in the second quarter is reflected on the demand side of the economy. Household final consumption expenditure increased by 0.5%, driven mostly by a rise in household spending on transport, food and nonalcoholic beverages, and health,” said Maluleke.

He added that exports increased by 4%, driven mostly by trade in mineral products, pearls, precious and semi-precious stones, precious metals, vehicles and other transport equipment.

While the imports of goods and services increased by 0.4%, “We’re not out of the woods yet. Even though the economy has seen consistent growth since that Covid-19 shock, this growth is not enough to return to pre-Covid-19 levels,” explained Maluleke.

Real GDP is at R1.131 billion in the second quarter of 2021, 1.4% down from the reading in the first quarter of 2020
Joe de Beer

Joe de Beer, the deputy director-general for economic statistics, said that, despite GDP growth of 1.2%, the country’s growth rate remained 1.4% lower than before the pandemic.

“Real GDP is at R1.131 billion in the second quarter of 2021, 1.4% down from the reading in the first quarter of 2020. This means that the economic impact of the wave of severe economic disruption, protest action and violence in KwaZulu-Natal and Gauteng, which took place in July, will reflect in the third quarter GDP results that are due for release in December.”

The latest GDP figures follow a revised 1% rise in real GDP in the first quarter of this year.

Stats SA 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”.

The Statistician-General said the rebasing was to ensure GDP estimates remained relevant, adding that countries periodically made improvements to how national accounts were 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.

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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.

Maluleke said the seasonally adjusted quarter-on-quarter expansion followed a 1% increase in GDP recorded in the first three months of 2021, and the unadjusted real GDP for the first six months of 2021 increased by 7.5% from the same period a year ago.

He said the revised GDP at current prices showed that the economy was 11% larger in 2020 than previously estimated.

“Differences between previous and revised levels are a typical outcome of rebasing and benchmarking exercises.

Our economy will still lag behind the powerhouses of Nigeria and Egypt
Statistician-General Risenga Maluleke

“When Nigeria overhauled its GDP in 2014, it discovered that its economy was 60% to 90% larger than previous estimates. The average increase between previous and revised GDP estimates across countries of the Organisation for Economic Cooperation and Development was 3.8% in 2010.

“Latin America recorded an average increase of 8.8% and, closer to home, Botswana revised the size of its economy down by 10%.”

He said the latest rebasing had not affected South Africa’s standing on the continent.

Maluleke explained that, in terms of purchasing power parity – the method used to compare different country currencies through a “basket of goods” – the World Bank continued to rank South Africa as the third biggest economy on the continent after Egypt and Nigeria.

“If the 2020 World Bank figure for South Africa is adjusted by Stats SA’s upward revision of 11% (to $796 billion [R11.4 trillion]), our economy will still lag behind the powerhouses of Nigeria and Egypt.”



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