By Evan Pickworth
Benchmarking and rebasing changes to national accounts due to be published later this month are set to have an impact on the levels and growth rates of GDP on an annual and quarterly
basis, said Statistics South Africa on Friday.
One of the main changes will be the inclusion in GDP of the productive activity of South Africa's "non-observed economy".
Speaking during a press briefing at Melrose Arch to prepare the market for the changes, head of economic statistics at Stats SA, Rashad Cassim, said that while one of the main inclusions will be estimates for the non-observed economy, the changes will be marginal.
Unlike in the two previous benchmark changes, there will not be a "big event", so the magnitude of revisions is expected to be smaller than has previously been the case (11-14% up in 1995 and 3.9% up in 2000).
The new base year now becomes 2005 from 2000.
"Let's not get carried away - the changes will be marginal," said Cassim, when talking about the non-observed economy.
He was unable to comment on expected levels, but emphasised that this is a periodic occurrence designed to improve the quality of the short-term national accounts.
"It provides an opportunity to incorporate irregular and periodic datasets that become available since the previous benchmark period," explained head of GDP, Joe de Beer.
These results will be published on Tuesday, November 24 and will be keenly monitored by the markets as it could change perceptions.
The three main improvement areas, says De Beer, are the inclusion of estimates for the non-observed economy, the introduction of international recommended classifications and increased compilation.
Increased compilation would, for example, include further breakdowns within sectors, like shoes having a separate line from clothing for better assessment.
This entails the GDP industry level increasing from 95 to 292 and product level from 28 to 105.
De Beer says the non-observed economy (NOE) refers to those economic activities that should be included in GDP, but for one reason or another are not recorded in the statistical surveys or administrative records.
GDP will now include things like underground production by people not registered in an industry and illegal production.
The estimates of NOE are incorporated into nine industries. It includes things like informal construction activities and prostitution.
However, De Beer points out that the informal sector makes up a very small part of South Africa's economy at 6.5% of total GDP.
Cassim makes the point that while the contribution to employment can be quite high, the value
can be quite small.
International recommended classifications include the introduction of the Central Product Classification in the supply and use tables and classification of household final consumption expenditure according to the Classification of Individual Consumption by Purpose.
De Beer says there is no guaranteed upward revision of growth rates, even with the realistic assumptions of increased levels.
"Real estimates in 2005 prices will behave differently from 2000 prices, especially if there were large movements in the prices," he cautions.
"Changing of base year, even without changing levels of data, will have an impact on growth rates," says De Beer.
"This is fairly normal practice in national accounts. The estimates will be closer to what real life is than was reported previously," said Cassim.
One big factor, it is conceded, that will need to change is the Budget deficit, which will be calibrated against the new GDP number.
Cassim and De Beer were unable to give much insight into the overall result, but they did conceded that technically this could change perceptions around the recession if the revisions are upwards.
The new data will include estimates for the third quarter of 2009 and revised quarterly, annual and regional estimates from the first quarter of 2002.
Finalised external trade (balance of payments) and government finance statistics for 2005 will be available.
South Africa's real gross domestic product (GDP) at market prices on a quarter-on-quarter (q/q) seasonally adjusted annualised (saa) basis dropped by -3.0% in the second quarter of 2009 from -6.4% in the first quarter.
This was the first instance of three consecutive quarters of negative growth since the fourth quarter of 1992.
The result last quarter had ushered in the first recession in 17 years.
It was also the worst figure since the third quarter of 1984 when GDP was at -6.5% and it is currently the first technical recession in South Africa since the fourth quarter of 1992.
Non-seasonally adjusted year-on-year (y/y) GDP in the second quarter was placed at -2.8% from a revises -1.2% (-1.3%).
For 2008 real annual GDP rose 3.1% from 5.1% in 2007.
Full year GDP in 2006 was 5.3% from the 5.0% year-on-year (y/y) reported in 2005, which was the fastest pace of growth since 1984.
It then reached 5.1% in 2007.
The revised level of GDP at current prices for 2005 was estimated at R1,544 billion, which is R3 billion higher than the previous estimate.
The estimate for 2006 was R1 745 billion, revised up by R4 billion.
The independent annual estimate for 2007 was previously revised by 0.1% to R1 999 billion.
