Stats SA decision on annualised rate as headline rate for GDP growth welcomed

The agency faced backlash for continuing with the annualised rates since the second quarter of 2020 when the data showed the GDP had contracted in half following the initial hard lockdown.

FILE: Statistician General Risenga Maluleke. Picture: @SAgovnews/Twitter.

JOHANNESBURG - Economists have welcomed Stats SA’s decision not to publish the annualised rate as the headline rate for GDP growth as it has led to confusion over the real rate of economic growth in the country.

The entity on Tuesday released the 2020 fourth quarter GDP growth, which recorded an annualised increase of 6.3%.

READ: SA economy grew by 1.5% in fourth quarter of 2020

However, given the major effects of the COVID-19 pandemic on the economy, Stats SA said that the data could be misleading.

Stats SA said that in future, it would publish quarter-on-quarter real GDP growth rate, which was seasonally adjusted as the headline rate.

The agency faced a backlash for continuing with the annualised rates since the second quarter of 2020 when the data showed the GDP had contracted in half following the initial hard lockdown.

READ: SA's Q4 economic growth was largely due to easing of lockdown restrictions

An annualised rate for a quarter of growth assumes that the same thing that is happening in that quarter will occur for the rest of the year, which was the contrary during 2020.

Citibank economist, Gina Schoeman: "because of the annualised rate being used in the headline measure through 2020 it made understanding the impact of the pandemic that much more difficult for users of the data. It's a much easier method to drop that annualised rate."

Stats SA admitted that during periods of economic stability the annualising could be misleading as it exaggerated growth rates that were unlikely to be repeated.

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