Calculation method
The economic growth figures for the third quarter of this year, released by Statistics SA today, show very clearly that the quarterly growth figures that were annualised (calculated at an annual rate) and adjusted for seasonal fluctuations were always wrong.
The most important and simplest reason for this is because the growth figures for a specific quarter are calculated by comparing it with the previous quarter instead of comparing it with the same quarter of the previous year. The Covid19 pandemic caused this calculation method to point out the growth figures for the second and third quarters of this year as totally excessive, which is in fact very misleading because the quarters are in many cases not comparable. According to Statistics SA's calculation the economic growth rate for the second quarter calculated on the current method was -51,7%, when in fact it would have been only -17,5% if the correct method had been followed by comparing it with the same quarter of last year. The growth rate for the third quarter of this year was 66,1%, while in reality it would have been only -6,0% if it had been compared with the same quarter last year. The quarter on the same quarter of the previous year will be annualised in any case. The quarter-on-quarter in the same year is statistically and economically irrelevant because the quarterly and annual growth figures are not calculated from the same basis.
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READ MORE- South Africa-ECONOMIC GROWTH - THIRD QUARTER 2020 Fanie Brink, Independent Agricultural Economist
