Despite slow final quarter, 2005 growth hits 4.
Gross domestic product (GDP) data for the fourth quarter of 2005, released on Tuesday, came in slightly lower than many economists had predicted.
The economy grew at an annualised rate of 3.3 percent in that quarter, following real annualised GDP growth rates of 4.6 percent, 5.4 percent and 4.2 percent during the first, second and third quarters, respectively.
First preliminary annual GDP estimates for 2005 are derived from the sum of the quarterly GDP data for the year. On this calculation, the annual growth rate in real GDP at market prices for 2005 is 4.9 percent.
The impact of an industry on the change in real GDP depends on two factors: the increase or decrease in the real value added of the industry and its relative size.
The main contributors to the 4.9 percent growth in 2005 were: finance, real estate and business services (1.5 percentage points); wholesale trade, retail trade, hotels and restaurants (0.8 percentage points); manufacturing (0.7 percentage points); and transport, storage and communications (0.6 percentage points).
The 3.3 percent annualised increase in the seasonally adjusted real GDP for the fourth quarter was mainly due to increases in the value added by: wholesale trade, retail trade, hotels and restaurants (1.2 percentage points); finance, real estate and business services (0.7 percentage points); transport, storage and communications (0.6 percentage points); and construction (0.3 percentage points).
The slowdown in growth between the third and fourth quarter - from 4.2 percent to 3.3 percent - was mainly the result of declines in mining and quarrying, which contributed -0.3 percentage points to fourth-quarter growth, and in manufacturing, whose contribution fell from 0.9 percentage points in the third quarter to nil in the fourth.
Statistics SA reports on GDP estimates in a number of ways, because the performance of the economy cannot be assessed on the basis of a single figure.
The GDP figures most often cited involve the seasonally adjusted and annualised rates of increase. Annualising estimates allows for a perspective on economic growth as if the most recent quarterly developments were sustained for an entire year. Removal of seasonal fluctuations allows for comparisons that are more accurate over time.
Stats SA also provides quarterly estimates that compare value added in a specific quarter with the corresponding quarter in the previous year. These data provide a picture of economic growth without the assumption that the current trend will be sustained for a calendar year.
This is particularly useful when comparing the performance of a six-month period with the previous six months, or (as reported in November 2005), the performance of nine months on nine months.
Prior to South Africa's adoption of the UN's System of National Accounts (SNA) in 1999, Stats SA released periodic input-output tables showing the interlinkages between different industries in the economy.
With the adoption of the SNA93, the compilations of input-output tables were replaced by the development of supply and use tables, which were published annually (albeit with a longish time lag).
These tables show the interrelationship between industries by analysing the various products produced in an industry as well their consumption in other industries. This provides a detailed perspective on the inner workings of the economy.
Stats SA has now shortened the time-lag in the publication of condensed supply and use tables as part of its annual estimates of GDP, released in November each year. For the first time the release of the GDP data earlier this week included a set of supply and use tables that describe the economy in terms of 27 industries and 27 commodities.
The publication of a more detailed set of tables will provide a better understanding of the methodology followed during the independent annual estimates of GDP, which are undertaken through this framework.
The latest GDP data release indicates that real annual GDP increased by 4.9 percent in 2005, up from the 2004 growth rate of 4.5 percent. This is despite the market's lower-than-expected increase for the fourth quarter of 2005 (3.3 percent), compared with the increase of 4.2 percent in the third quarter of 2005.