A VERY healthy gross domestic product (GDP) growth for the third quarter of the year but a worrying series of adjustments for all the figures for the past three years is the news from Statistics SA.
The real GDP at market prices rose a seasonally adjusted and annualised 3.8% in the third quarter compared with the second quarter. This follows an adjusted real annualised economic growth rate of 2.0% (revised from 0.8%) during the first quarter and a 2.8% (revised from 1.6%) growth rate in the second quarter of the year.
The growth rates of 1998 and 1999 were also adjusted upwards to 0.7% (0.6%) and 1.9% (1.2%) respectively.
These figures from Statistics SA were surprising. While many commentators expected a strong rebound in growth in the third quarter, the revised figures for 1999 and the three quarters of 2000 were unexpected.
Although the need to revise estimates as more data becomes available is understood, the magnitude of such changes is a cause for concern, according to Standard Bank economist Goolam Ballim. There is a world of difference between the original 0.8% growth reported for the first quarter of the year and the revised 2.0%, he told FTW. Such changes certainly have an economic impact and make the task of the economic forecaster little more than a lottery.
But there's no suggestion that Stats SA has been indulging in any jiggery-pokery, Ballim added, and the fact that it's an upward adjustment in all cases can only be welcomed.
The magnitude of the adjustments is such, he said, that we now have an economy that is growing relatively fast.
Whether this is the experience out there in the trenches where economic activity takes place is not quite clear. Growth rates of 2.0% in q1 2000, 2.8% in q2 and 3.8% in q3 imply that most forecasts for 2000 and beyond
will have to be adjusted upwards.
Our outlook for GDP growth for the rest of the year remains positive, with a slightly higher growth rate in the fourth quarter anticipated. Our view is that a growth rate above 3.0% is now the likely outcome for 2000.
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