The updating and benchmarking of the gross domestic product (GDP) figures for South Africa provide more complete data for both public and private sector decision-makers, which are an essential tool for sound policymaking and business planning. 

In commenting on the revised and newly benchmarked GDP figures released by StatsSA on 29 October, Prof. Raymond Parsons, economist from the North-West University (NWU) Business School, says the revision provides a more accurate and updated mirror of the South African economy.

“It helps to identify the changes that have emerged since the previous benchmarking was done. On the positive front, the latest GDP review highlights resilient foundations that exist in key sectors of the South African economy.”

Prof. Parsons says it also signals that structural reforms are beginning to yield some positive results. The services sector seems to have done most of the heavy lifting to anchor economic activity, and household consumption is still revealed as a vital engine of growth. 

“Fixed investment, on the other hand, remains a lagging factor. Although the new GDP data has improved the look of various key ratios, the absolute metrics do not change and remain a valid reality. By altering the customary ‘denominator’ used for critical economic metrics, such as public debt, it shrinks the ratios without, however, paying off the debt.”

Prof. Parsons explains that while it does not drastically rewrite the fiscal space, it nonetheless provides technical breathing room for the further stabilising of public debt in South Africa, as projected in the recent Medium-Term Budget. 

“Looking ahead, and despite the real positive pockets of improvement in the economy, the broader outlook still reveals vulnerabilities at various levels. The headwinds and tailwinds that need to be navigated by South Africa remain the same.”

He concludes that the revised GDP picture emphasises why accelerating the pace and implementation of key structural reforms are nonetheless still needed to unlock the true economic potential of South Africa if South Africa is to break out of its current narrow 1% to 2% growth corridor.
 

Prof. Raymond Parsons