SA growth 'way understated'

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http://www.fin24.co.za/articles/eco...px?Nav=ns&lvl2=econ&ArticleID=1518-25_2107392
Johannesburg - New research that shows the South African economy could be up to 9% larger than originally thought is "just the beginning".

Jeff Gable, the head of research at Absa Capital, told Fin24 he's surprised that the discrepancy is "only" 9%, as noted by the University of South Africa's Bureau for Market Research (BMR).

"For South Africa, the difference should be particularly acute because so many people operate in the informal economy. It would not be surprising if the undercount were even larger."

Professors Carl van Aardt, Andre Ligthelm and Helgard van Wyk of the BMR said that, using datasets from work the BMR has done over the past six years for many clients in the financial sector, gross domestic product (GDP) could be between 5.8% (or R100bn) and 9% (or R150bn) higher than the current official Statistics SA 2006 GDP estimate of R1.727bn.

Should the economists be correct, this could have implications for other economic indicators. For example, South Africa's current account deficit as a percentage of GDP would be lower than is currently thought.

Business Report, which first reported the story on Wednesday, said economists were divided on whether the BMR data was correct or not.

Could be even higher

Gable says that it is common to undercount the size of developing economies, adding that in South Africa, there is much qualitative and quantitative evidence to suggest that this is the case locally.

"Government revenue, which is what we measure most well, have been growing at a much faster than nominal GDP for years."

Undercounting is not a phenomenon unique to developing countries, says Gable. "This is true even for developed countries. Many transactions are cash transactions - such as paying an electrician - and these go unregistered."
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Some good news. As I said before, RSA has many opportunities for investors, affords people to make high returns, but at a high risk. If I had independence, financial security overseas I would invest here, but I would be prepared to lose everything because of expropriation by the government and corruption in the government.
I would only purchase assets which I could liquidate in due time when things take a turn for the worse. An example of such a turning event would be if Zuma became president.
 
"Government revenue, which is what we measure most well, have been growing at a much faster than nominal GDP for years."
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Yes but increased revenue leads to increased spending which leads to increased inflation which leads to a less healthy economy. So, no good news there.

And allied with a decreasing 'legitimate' tax base and no real delivery from government, nevermind arms deals and 2010 and the other very long list does not lead to increased confidence in the future.

All in all leaves us very much where we are: massive 'legitimate' unemployment, massive costs of business and an uncompetitive environment in all spheres (not least telkom, banking and fuel costs!)

Um, what was the good news again? Until companies like telkom and the banks wake up to the fact they are causing unemployment little will change: a decreasing tax base and increasing costs due to inflation. A big world: and lots of other places to invest!
 
Increased spending does not automatically lead to inflation. There factors like spare supply/production capacity and excessive increases in money supply to consider.

The formal tax base in South Africa looks very healthy.

Are our fuel costs really that bad or were we accustomed to unsustainably low fuel prices?

Despite thievery by companies like Telkom the cost of doing business in South Africa remains relatively low. It just isn't as cheap as it should be.
 
noxibox said:
Increased spending does not automatically lead to inflation. There factors like spare supply/production capacity and excessive increases in money supply to consider.
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Notice any of that? I didn't think so. Aren't 'excessive increases in money supply' a factor of inflation?

The formal tax base in South Africa looks very healthy.
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Ya with over a million taxpayers having left the country and thousands of illegal immigrants. Where do you get it?

Are our fuel costs really that bad or were we accustomed to unsustainably low fuel prices?
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Low fuel prices? The joke of the week? Yes before we started war in Iraq fuel was $22 a barrel. Now where are we? So no, nothing to do with unsustainability, more like uncertainty in a world at war (well according to George!)

Despite thievery by companies like Telkom the cost of doing business in South Africa remains relatively low. It just isn't as cheap as it should be.
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Oh yes, what was the quote on this forum AT&T? 25% of their business costs in SA are telkom costs. Relatively low? Why? Because we have a 'emerging' economy where millions live in shacks and telkom and the banks rip the consumer a new one every month? Telkom and the banks will ensure people continue to live in shacks so no 'emerging' economy there: it is these companies which spell the future of our economy so I see nothing rosy there.
 
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