Fanie Brink, Independent Agricultural Economist
"The prediction that South Africa can expect the 'strongest growth in 14 years' this year is completely wrong and totally misleading as there is still at this stage no indication that the economy will grow at all this year," says Fanie Brink, an independent agricultural economist.
He referred to the article "Sterkste groei in 14 jaar vir SA voorspel” which appeared on the website of Netwerk24 today and said the only real indicator at this stage of a possible growth rate that can be expected for 2021 is the 2,7% with which the economy contracted in the first quarter of this year when compared to the first quarter of 2020. Not an increase of 4,6%, according to Statistics SA, when compared to the fourth quarter of 2020 which is totally wrong and misleading.
The growth rate for 2021 will be calculated at the end of the year by comparing the sum of the Gross Domestic Product (GDP) for four quarters in 2021 with the sum of the GDP for the four quarters in 2020 and not by comparing the quarterly GDP this year with the previous quarter each time which cannot be any indication of the growth rate for 2021.
The growth rate of the first quarter was in fact only 1,15%, but Statistics SA believes that if the rate is multiplied by 4 (annualised as an annual rate) it will give a useful indication of the growth rate for 2021 if the economy would grow steadily every quarter this year.
"Nothing can be further away from the truth because the economy will not grow by an average of 1,15% in every quarter this year which will bring the annual rate to 4,6%. This has absolutely nothing to do with the calculation of the annual rate and nobody is interested in a 'usable growth rate' but in a growth rate that has been calculated correctly!"
"A quarterly growth rate compared to the same quarter of the previous year will be an annual rate in each case!"
Statistics SA also creates a second problem for itself by adjusting the seasonal differences between the quarters with a methodology that was obtained somewhere in Ireland that no one knows how it works and which seasonal differences are excluded from the initially wrong calculation method. The seasonal differences can also not be completely eliminated because they have to be reflected in the growth figures.
"If the same quarters (more or less the same seasons) were to be compared with each other, it would also not be necessary to adjust the growth figures for seasonal differences."
Statistics SA decided last year not to annualise the quarterly figures any longer but postponed it because they realised they would finally paint themselves into a corner if they continued with this calculation method because the annual growth rates would still be wrong and the annual growth rates would then be 4 times smaller than expected.
This wrong calculation by Statistics SA causes misleading indications for the government and the private sector as well as for foreign and local investors who have to make important decisions about alternative investment options.
The misleading information also casts oil on the fires of local asset managers and financial advisers who use it to advise people to invest more money in South Africa when in reality the economy is already finally collapsing and they will not themselves bear the risks.
"The chances that the economy will grow again under the socialist ideology of the ANC government are extremely slim which could result in serious financial losses."
The problem is exacerbated by the Reserve Bank, which believes that it can control almost the entire economy while there is absolutely no evidence for its claims that it can curb the inflation rate, protect the exchange rate or stimulate and create economic growth with its interest rate policy. .
"The economy will only grow again if the government and its social partners, the Reserve Bank, most economic and political commentators and the media would one day understand that economic growth is created from the supply and demand side of the economy and that the inflation and exchange rates are determined by the supply and demand in the economy and not by the single biggest delusion in economic science over interest rates of most central banks in the world,” says Brink.
The quarterly publication of Statistics SA can be downloaded at the following link:
http://www.statssa.gov.za/.../P0441/P04411stQuarter2021.pdf
