How seriously should policymakers take initial GDP estimates?
Gross domestic product is the key measure of the health of an economy. But how much store should we place in a figure that seems difficult to pin down?
On June 6 2017, Stats SA’s quarterly GDP update made for grim news. Two consecutive quarters of negative growth had pushed the economy into a technical recession. Nine months later, however, the national statistics agency revised its numbers and — just like that — the recession had never happened. Last week’s GDP announcement revealed nothing as dramatic: Stats SA didn’t magic away SA’s 2018 recession. But it did revise its figures going back four years. Growth was revised up from 1.3% to 1.4% for 2017, and down from 1.3% to 1.2% for 2015, and from 0.6% to 0.4% for 2016. For 2018, it was revised down by 0.1 percentage point in each of the first two quarters — to -2.7% in the first and -0.5% in the second — and third-quarter growth was revised up from 2.2% to 2.6%. GDP, the estimated value of all the goods and services produced in a country over a specified period, is a key metric used by policymakers, economists and investors to judge the health of the economy. The figure is used to...
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