Towards the end of August I released Poverty Trends Report which showed that South Africans were getting poorer.
This trend emerged in the period 2011- 2016 compared to an earlier period of 2006-2011 when poverty was declining. From media comments the nation was emitting a sentiment of depression.
At the beginning of September I released the second quarter GDP report which revealed that South Africa had crawled its way out of recession. The mood was a sigh of relief.
What then do these numbers mean? In the main it is desirable to assemble a numerical policy brief discussing the totality of the numbers each quarter or however often in order to secure a status of the nation that provide a fairly comprehensive picture. This could temper the schizophrenic responses that we witnessed from society and enhance the value of statistics.
To clarify and move towards explaining the numbers, I take you through the second quarter report.
After two consecutive quarters of decline, the South African economy spluttered back to life in the second quarter of 2017. Positive contributions to higher economic activity across most industries – in particular agriculture, finance and mining – lifted the gross domestic product (GDP) by 2.5 percent quarter-on-quarter (seasonally adjusted and annualised).
Agriculture continued to show strong recovery from South Africa’s recent drought, increasing production by 33.6 percent mostly driven by a rise in the production of field crops, in particular maize and wheat, as well as increased production of horticulture products such as vegetables.
South Africa is on track for record-breaking maize crops if production continues at estimated levels, according to figures from the Crop Estimates Committee (CEC). The CEC expects the country to produce 16.4 million tonnes of commercial maize in 2017, more than double than last year’s harvest, and higher than the current record of 14.7 million tonnes produced in 1981.
The bumper crop has already provided 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%) after three consecutive quarters of decline, and a strong rebound in electricity, gas and water (8,8%).
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.
Dr Pali Lehohla is South Africa Statistician-General and Head of Statistics South Africa