Johann Els, Chief Economist at PSG Financial Services
Stats SA released its revised GDP figures yesterday, following a rebasing and benchmarking exercise. Rebasing changes the base year used to measure the economy, from 2015 to 2022 in this case, while benchmarking uses more complete data to improve historical estimates. The exercise also includes changes to methodology, industry classifications and weights, as well as better estimates of parts of the economy that were previously difficult to measure, including illegal and informal activity, own electricity generation and e-hailing. Together, these changes give us a more accurate picture of the size and structure of the economy. The result is that South Africa’s economy is now around 5.0% larger than previously estimated.
There are also implications for the fiscal numbers. Based on the revised GDP estimates, the gross debt ratio for the current fiscal year could fall from 78.2% to an estimated 74.5% of GDP. The consolidated budget deficit could fall from 3.9% to an estimated 3.7% of GDP, while the primary surplus could ease from 1.7% to an estimated 1.6%.
These are improvements in the ratios, not in the actual rand amounts of government borrowing or spending. The larger GDP denominator should improve South Africa’s fiscal indicators and help when investors and rating agencies assess the sustainability of government debt.
The biggest revision in nominal GDP was in mining, up 12.5%, partly because of better coverage of illegal mining. Finance, real estate and business services was revised upwards by 9.1%, largely because of improved estimates of owner-occupied housing.
The revised historical growth figures show that the broad picture remains much the same, although there are some differences. Growth in 2020 has been revised from -6.2% to -6.8%, while the recovery in 2021 has been revised from 4.9% to 4.5%. Growth in 2022 was revised slightly higher, from 2.1% to 2.2%. The 2023 estimate has been reduced from 0.8% to 0.6%, and 2025 growth from 1.1% to 0.9%. The 2024 estimate is unchanged at 0.5%.
Overall, this is a welcome improvement in how we measure the economy. But it does not suddenly make South Africa richer or solve the growth problem. What matters is still whether we can lift actual growth over the next few years.
ENDS
