South Africa’s economy grows 4.9% on paper after statisticians revise how GDP is measured

South Africa’s economy is larger than previously estimated after Statistics South Africa revised the way it measures economic activity. The rebasing exercise increased the estimated value of the country’s gross domestic product in 2022 from R6.7-trillion to approximately R7-trillion.

The revision does not mean the country suddenly produced more goods and services overnight. Instead, statisticians updated the methods and information used to calculate the size of the economy, bringing the estimates closer to the structure of economic activity at the time.

The new calculations use production patterns in 2022 and adjust the relative importance of different industries. This matters because the economy changes over time, and measurement systems need to account for activities that may previously have been undercounted or inadequately represented.

Mining recorded the biggest increase in its contribution after the rebasing, rising by 12.5%. Statistics South Africa attributed much of this adjustment to better coverage of unobserved economic activity, including illegal mining. The expansion of illegal mining has become particularly significant as higher gold prices have increased the incentive for illicit operations.

Finance, real estate and business services also received a larger weighting, with their contribution increasing by 9.1%. The revised estimates further show that the unobserved economy accounted for 8.7% of GDP, compared with the previous estimate of 7.3%.

The revision is important for policymakers, investors and economists because GDP figures influence how South Africa’s economic performance is assessed. They also help determine the scale of public debt relative to the economy and provide a basis for comparing the country with other markets.

However, a larger measured economy does not automatically mean households have more money, unemployment has fallen or living conditions have improved. The revision changes the statistical picture, not the immediate financial circumstances of ordinary South Africans. Do you think the revised GDP figures will change how investors and international institutions view South Africa’s economy?

Source: https://www.moneyweb.co.za/news/economy/sa-economy-5-3-bigger-than-thought-after-gdp-rebasing/

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