Overview

Gross Domesitic Product ("GDP") is a measure of how much goods and services a country produce in a given year.

Each good or service is given a value based on the price paid for that good or service. But this creates a slight problem, as inflation causes price to increase. If you had to measure the total value of goods and service using prices that pervailed during the year (called "nominal GDP"), it would almost always look like GDP was increasing, even if the country produced the same amount of goods and services compared to last year. For this reason, economists use a concept called "real GDP". Real GDP removes the impact of inflation by measuring the value of all production based on prices that pervailed in a set year, which in the case of STATS SA, is 2015.

So, if you want to measure growth in actual goods and service, select the real GDP button on the dashboard. In some cases, you may be specifically interested in considering nominal GDP. For exampple, you may want to explore the extent to which different sectors have become more important within South Africa, and for that exercise it would likely approrpriate to measure the value of goods and services in the year in which they were sold.

Expenditure approach

This dashboard utilises data from STATS SA's expenditure approach to GDP measurement. In the expenditure approach, STATS SA measures the total expenditure made on all final goods and services within the economy, within a given period (e.g., a quater or a year). Notice the term "final" in that defintion: we do not care about the journey through the supply chain made by a product, where additional value is added by each point in the supply chain, e.g., farmers plant and harvest the wheat, factories make pasta, other factories make plastic packaging, distributors transport the packaged pasta to wholesalers, wholesalers distribute it to retailers where it is finally sold to the customer. We only care about the final sale to the consumer who eats the pasta. It is that expenditure, and only that expenditure which is included in the expenditure approach.

This is contrasted with production approach, which is STATS SA's official approach to GDP measurement. In the production approach, which is also called the value-added approach, the value added at each point along the supply chain is measured and allcoated to the relevant sector within the economy. You can explore our "GDP South Africa" dashboard using the production approach here, where you will also find an explanation on how GDP is calculated according to production approach.

The two approaches measure the same quantity - the value of total goods and services produced by a country in a given year. They just use different calculation approaches, and accordingly, they also produce different sector splits of the economy. That is why we provide both dashboards because each approach reveals unique information.

The residual

Because the two approaches use different calculation methods, they typically produce slightly different results. For this reason, STATS SA adds a "residaul" to the expenditure approach, which ensures that total GDP (and GDP growth) according to both approaches is identical. For sector splits, we typically exclude this residual by default, as you can see (and easily change) on the dashboards. Note a 2010 change in STATS SA's methodology had the following result: for data prior to 2010, the STATS SA residual did not secure a perfect balance between the expenditure and production approaches. Therefore, InfoDasher calculated and used a new own residual to ensure 100% balance.

Terminology map

This dashboard relies directly on the GDP data files provided by STATS SA. Regarding terminology adn meta tags, we did make certain adjustments for ease of use. The terminology map beween InfoDasher and Stats SA is shown in the table, together with some useful notes to help your understanding.