3rd Quarter GDP Provides Some Cheer

GDP data can reflect a quite divergent picture when viewed from two different perspectives, each being 100% accurate, but one representing the reciprocal of the other.

On 8 December, Statistics SA released South Africa’s GDP figures for the third quarter of 2020. The results were widely anticipated, namely a pronounced V-shaped recovery from the disastrous second quarter, when the stringent lockdown regulations of April caused record declines in the level of economic activity in all sectors except for agriculture.

According to the official data, the growth of the so-called "annualised" and seasonally adjusted GDP for the third quarter amounted to 66%, after declining by 52% in the second quarter.

This method of calculation has its merits for large and highly diversified economies, but for an economy like South Africa, the recommended manner to report on GDP is simply to compare the relevant quarter’s data to the same quarter a year earlier.

This method reveals a year-on-year decline of 17.5% for the second quarter and a much smaller decline of 6% in the third quarter. However, when calculating third quarter GDP from the perspective of the year-on-year rate of recovery, the remarkably swift rebound from the pandemic shines through.