Souorce: Imraan Valodia, Maverick Citizen, 9 September 2020, photo credit: Centre for International Gevernance Innovation
Statistics South Africa (StatsSA) released the eagerly awaited Gross Domestic Product (GDP) estimate for the second quarter of 2020 on Tuesday. In its own summary report, and in numerous press reports, the following is said: “South Africa’s gross domestic product (GDP) decreased by 51% in the second quarter of 2020 owing to the impact of Covid-19 lockdown restrictions since the end of March 2020.
Based on this report, a number of publications and commentators reported that South Africa’s GDP has halved as a result of Covid-19 (see this, for example).
So, let’s put some facts on the table before getting into the technical issues. We can safely say the following:
- Covid-19 and the associated lockdown has had a devastating impact on the economy and the recovery process will be very tough.
- While the impact across the globe has been uneven, South Africa is not alone, and is one of many countries where the impact has been severe.
- The real number to focus on is the fall in the GDP between the first quarter of 2020 and the second quarter of 2020. Our lockdown was announced on 23 March and began on 26 March 2020 so, give or take a few days, the first quarter is pre-Covid-19, and the second quarter is post-Covid-19 and the lockdown period. In truth, the effect of Covid-19 began much earlier, with people changing travel plans, shortages of some personal protective equipment (PPE) and so on but, for simplicity, let’s ignore the effects prior to the announcement of the lockdown.
- South Africa’s GDP in the second quarter, compared to the first quarter, did not fall by 51%. It fell by 16.4%.
- While it is technically correct to say that, on an annualised, seasonally adjusted basis, GDP in the second quarter fell by 51%, in our current context, this is a highly misleading statistic. StatsSA should have published the report with the following health warning: “Before quoting this report, please take the time to understand the concept of an annualised quarterly GDP estimate. Oh, and please do think for a minute.”