By Lehlohonolo Lehana.
After a crash in the agricultural sector that led SA’s economy to shrink 0.3% in the third quarter, new research found “various areas of concern” in the calculation of the data.
The latest GDP estimates for the South African economy, released by StatsSA, have caused some consternation among analysts and policymakers.
The data indicates a notable contraction of 0.3% in real terms for the third quarter of 2024, contrary to the expectation that recent positive developments would drive substantial economic growth.
The data suggests that the agricultural sector was a major contributor to this unimpressive growth performance, and that it experienced a significant decline of 28% in the past quarter and a year-to-date decline of 15.5%.
Bureau for Food and Agricultural Policy (BFAP) contends, that, despite the inherent challenges in accurately capturing quarterly agricultural GDP figures, revisions are necessary.
Additionally, reforms in the methodology for calculating and verifying these agricultural statistics, especially regarding quarterly dynamics versus annual shifts, could provide significant robustness to the process, report finds.
“Rather than the reported year-to-date (first three quarters of 2024) decline of 15.5% for agricultural GDP, our best estimate suggests a decline of 5-6%. Our revised baseline model forecasts a full-year (note: all four quarters) contraction of 4.8% for the agricultural sector in 2024.”
Statistics South Africa didn’t immediately respond for comment.
Agri SA in a statement said, these results were shared with the agriculture department, which will engage officially with Statistics South Africa. To ensure better data quality going forward, the agriculture department, Agri SA, Agbiz and BFAP will form the “SA’s Agricultural Conditions Assessment Committee” starting January 2025.
The Committee will meet regularly to assess the state of agriculture in South Africa and release brief insights following their discussions. Detailed communication about the Committee will be provided in January 2025.
Meanwhile North West University Business School economist Professor Raymond Parsons said the unexpected and disappointing GDP growth figures for the third quarter confirm the extent to which South Africa’s growth prospects remain vulnerable to negative factors such as adverse weather conditions, weakened exports and other lagging sectors.
“The negative economic and other factors in [the third quarter] have clearly outweighed the positive ones. To the extent that tough climatic circumstances have made agriculture the largest negative contributor to lower growth, there is potential for a future turnaround if weather conditions improve sooner-rather-than later.
“South Africa’s economic recovery is evidently slow and uneven. Looking at the bigger picture, these negative growth trends therefore confirm why the Government of National Unity (GNU) policy of seeking higher, inclusive, job-rich growth must remain the overriding priority.
Read the full report here:https://www.bfap.co.za/wp-content/uploads/2024/12/AgGDP-Q3-of-2024.pdf.