Sus­tain­ing higher rates of growth re­mains as im­por­tant as ever

The Sunday Independent - - FEATURES -

vided some re­lief for cash-strapped South African house­holds.

Higher stocks of maize and wheat have be­gun to dampen prices, with bread and ce­real prices fall­ing month-on-month for six con­sec­u­tive months, ac­cord­ing Stats SA’s most re­cent con­sumer price fig­ures (Fe­bru­ary to July).

The fi­nance in­dus­try was the sec­ond largest con­trib­u­tor to GDP growth in the sec­ond quar­ter of 2017, grow­ing by 2.5 per­cent on the back of higher ac­tiv­ity in fi­nan­cial in­ter­me­di­a­tion and aux­il­iary ac­tiv­i­ties.

The min­ing in­dus­try ex­panded by 3.9 per­cent on the back of in­creased pro­duc­tion of coal, gold and “other” metal ores such as iron ore and man­ganese ore.

This is the sec­ond con­sec­u­tive quar­ter of growth for min­ing, although pro­duc­tion was more sub­dued than the 13.1 per­cent growth recorded for the first quar­ter of 2017.

Other no­table fea­tures of the sec­ond quar­ter in­clude pos­i­tive growth in man­u­fac­tur­ing (1.5 per­cent) af­ter three con­sec­u­tive quar­ters of de­cline and a strong re­bound in elec­tric­ity, gas and wa­ter (8.8 per­cent).

The 2.5 per­cent rise in GDP brings to an end South Africa’s sec­ond re­ces­sion since 1994.

How­ever, there are a few sta­tis­ti­cal points to note.

Firstly, quar­terly growth rates can be quite volatile.

Sec­ondly, the head­line fig­ure of 2.5 per­cent is the growth rate af­ter an­nu­al­i­sa­tion, in other words what the an­nual growth rate would be if the quar­terly rate were to be re­peated for four con­sec­u­tive quar­ters.

Thirdly, if we com­pare the first half of 2017 with the first half of 2016, the growth rate was 1.1 per­cent.

Although the head­line fig­ure is the most pub­li­cised in the me­dia, the key les­son is that it should not be used in iso­la­tion.

There are other GDP in­di­ca­tors that com­ple­ment the head­line fig­ure and taken to­gether they pro­vide a more com­pre­hen­sive pic­ture of eco­nomic per­for­mance.

So even though 2.5 per­cent might seem like an im­pres­sive re­cov­ery, longer-term in­di­ca­tors show sub­dued growth.

As a na­tion, the goal of achiev­ing and sus­tain­ing higher rates of eco­nomic growth and de­vel­op­ment re­mains just as im­por­tant as ever.

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Pali Le­hohla

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