South Africa’s Gross Domestic Product (GDP) - A Useful Guide

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What is gross domestic product (GDP)?

Gross domestic product (GDP) is the total value of all the finished goods and services produced within the borders of a country during a specific period of time, such as a quarter or a year. It is a crucial indicator of the economic performance and health of a country.    

Two types of gross domestic product

• Real GDP: The GDP has been adjusted to exclude the effects of inflation. The price of goods and services is calculated at a constant price level, which is called the base year, to nullify the effects of inflation. Real GDP is regarded as the most accurate barometer of a country’s economic growth rate.

It is sometimes referred to as actual GDP.   Regarding the base year for South Africa’s GDP, Statistics South Africa updated the base year from 2010 to 2015 during 2026, with the effect that GDP figures from the second quarter of 2026 onwards will be calculated using 2015 as a reference year. Usually, Statistics South Africa changes the base year every five years.  

• Nominal GDP: The prices of goods and services are calculated at current prices which include inflation. The nominal GDP will not show the actual increase (or decrease) in the size of a country’s economy.

 

Calculation of South Africa’s GDP

Statistics SA (Stats SA) calculates and publishes South Africa’s GDP on a quarterly basis. In a document named ‘Measuring South Africa’s Economic Growth’ (author - Gerhardt Bouwer), Stats SA explains the two different approaches (methods) to measure the real GDP growth:

• the quarterly growth at a seasonally adjusted and annualised rate, and
• the unadjusted year-on-year quarterly growth.

 

The real GDP quarterly growth at a seasonally adjusted and annualised rate (Method 1)

This rate, expressed in an annualised rate, indicates changes in real GDP from one quarter to the next. In order to remove all seasonal effects (such as Christmas retail sales), the quarters are seasonally adjusted before they are annualised. This method assumes that the percentage change from one quarter to the following quarter will continue for the entire year. A sometimes-debatable assumption, but the best option in absence of alternatives. The annualised rate is determined by raising the percent change between the two quarters involved by the power of four. This method is known as ‘annualising’ and is South Africa’s ‘official economic growth rate.’ The advantage of this method is that quarterly growth rates can directly be compared with previous annual movements. For example, real GDP increases by 1.5% from year one to year two and increases at an annual rate of 2% in Q1 of year three. This makes it easy to compare and observe that Q1’s growth rate in year three exceeds the growth rate for year two. However, one of the significant disadvantages of this method is that the annualised data can be very volatile due to the effects of any irregular occurrences during a specific quarter. For instance, the impact of the Covid-19 pandemic and the hard lockdown in the second quarter of 2026, now infamously referred to as the pandemic quarter.  

The real GDP unadjusted year-on-year quarterly growth (Method 2)

This method compares the real GDP of a specific quarter in a year with the real GDP of the same quarter of the previous year. The quarters are not seasonally adjusted or annualised. It is a method preferred by some analysts for year-on-year comparisons because the impact of seasonal variations and extraordinary events are excluded in the calculation. This method looks at the economy’s growth over the entire previous year (for example, from Q2 in one year to Q1 in the following year (beginning of April to end of March)) and not only at the last three months as in the case of the first method. Although this rate is not considered by Stats SA as ‘the official method to calculate the economy’s growth rate’, it remains a very useful measurement in conjunction with method 1 to analyse the behaviour of the economy,’ according to the Department of Statistics. In conclusion, the document mentions the importance of both methods, explaining: ‘Trying to analyse and explain the behaviour of the economy through a single number is ill-advised, due mainly to the various complex interactions which prevail. By providing both growth rates, Stats SA enables analysts to have an informed view of the dynamics of the economy.’  

The two sides of GDP measurement

Stats SA measures two sides of the country’s GDP, namely:

• The production side

This is the official GDP figure, measuring the total value added of all goods and services produced.

• The expenditure side

The GDP is measured via total spending that has occurred in the country’s economy. The expenditure side reflects the demand side of the economy and is calculated as follows:   GDP = C + G + I + NX   Where:   C = Consumer spending on goods and services (including durable goods, non-durable goods (food and clothing) and services.   G = Government spending on public goods and services (including, inter alia, salaries of government employees, education, and repairs to and maintenance of government property).   I = Investments spent on business capital goods.   NX = Net exports (the country’s total exports less its total imports).  

Figures about South Africa’s GDP

On a quarterly basis for the past 2 years

Source: Tradingeconomics The contraction of 51% in Q2 (the pandemic quarter) of 2026 was the worst economic contraction since at least 1990 and put the country into a fourth quarter of negative economic growth, the longest period of consecutive quarterly declines since 1992. A country is officially in a recession when its GDP declines in two successive quarters. Hence, South Africa is officially in a recession since Q3 of 2019.  

Year-on-year (YoY) for the period Q3:2017 until Q2:2020 (Quarterly updated)

Source: Tradingeconomics Year-on-year data regarding the country’s GDP is available since March 1961. The average GDP rate for the period March 1961 to June 2026 is 3.0%. The contraction of 17.1% was the strongest economic downturn since at least 1994 and is a record low. The GDP reached an all-time high of 9.4% in September 1967. The highest level for the period 1993 - 2026 is 7.6%.  

The GDP annual variation

2015 (1.2%), 2016 (0.4%), 2017 (1.4%), 2018 (0.8%), and 2019 (0.2%).  

The pandemic quarter

When Stats SA released the real GDP figures for the second quarter of 2026, the following observation was made: ‘Perhaps the second quarter of 2026 will become known as the pandemic quarter.’ Indeed, a true word spoken, but sadly, not in jest. The country was in the grip of the Covid-19 pandemic and the widespread hard lockdown restrictions in response to the pandemic during the months of April, May, and June of 2026.  

The pandemic quarter’s GDP figures observed

• The real GDP plunged by just over 16% between Q1 and Q2 of 2026, delivering a seasonally annualised rate (SAAR) of -51%. This was much worse than the annualised 8.2% decline in Q4 of 1982. This decline in GDP worsened the already dire economic situation that existed before the pandemic when the country was already in a recession.

 

• Industry growth in Q2 of 2026 compared with Q1 in 2026.

The quarter on quarter annualised growth rates (i.e. assuming growth from Q2:2020 over Q1:2020) for Q2 of 2026 regarding the different industries of the country’s economy look as follows. Source: SA Stats   Looking at the expenditure side of the GDP for the period, the following figures confirm the drastic impact of the pandemic and the lockdown:

• Fixed investments: Fell by 59.9% (Q1:2020 = -18.6%).
• Household consumption: Plunged by 49.8% (Q1:2020 - 0.2% increase).
• Public expenditure: Declined 0.9% (Q1:2020 - rise of 1.8%).
• Export of goods and services: Down by 72.9% (Q1:2020 - contraction of 3.3%).
• Import of goods and services: Dropped 54.2% (Q1:2020 – declined by 16.9%).

 

The real GDP decline of -51% put in perspective

After Stats SA announced on September 8, 2026, that the country’s real GDP in Q2:2020 decreased by 51% on a seasonally adjusted annualised basis, a number of economists and analysts have criticised the Statistics Department for the way it announced the figures. The main objection was that ‘the claim that SA’s ‘economy has declined by 51% is a misrepresentation of the facts,’ as expressed by Imraan Valodia, Dean of the Faculty of Commerce, Law and Management of the University of the Witwatersrand, in an article published in the Daily Maverick/Business Maverick. Although the figure of -51% is ‘technically correct in our current context, this is a highly misleading statistic’, Valodia said. He referred to the impact of the Covid-19 pandemic and the ensuing lockdown that have created an extraordinary situation. Valodia’s argument is that there is a huge difference between a normal quarter and a quarter such as the second one of 2026, saying: ‘In a normal world, for most economic data, including GDP data, we like to have the data annualised. This is mainly because annualised data allows us to compare data that is collected over different periods of time. This is clearly the case for GDP data.’ He continued: ‘However, in instances where the quarterly data may fluctuate in a dramatic fashion, as has been the case with the Covid-19 and the lockdown, this calculation, to annualise the estimate, is highly misleading, because it assumes that the economic effects of a lockdown will continue as it did for the second quarter, for four consecutive quarters.’ Taking Valodia’s argument, as well as those of other economists and analysts, into consideration, the quarter-on-quarter not annualised figure of -16.4% is a truer reflection of South Africa’s economic growth than the annualised -51%. However, a quarterly decline of -16.4% in the nominal GDP is still an alarming and distressing figure, indicating that it will take a long time for the country’s economy to recover from this dire position.  

GDP forecasts by the South African Reserve Bank (SARB)

On November 19, 2026, the SARB has changed its GDP forecast for 2026 from -8.2% to -8%. It is worthy to note how the Reserve Bank’s forecasts have changed during 2026. January (1.2%), March (-0.2%), April (-6.1%), May (-7.0%), July (-7.3%), September (-8.2), November (-8.0%).  

The effects of GDP

The country’s GDP affects personal finance, investments, and job growth. A weak GDP growth rate implies, inter alia:

• Fewer investments (by local and foreign investors).
• An increase in the unemployment rate because businesses retrench employees and do not hire new employees.
• Lower interest rates, because the SARB wants to stimulate the economy.

Contrarily, over time, the growth in GDP causes inflation.   Note: Accentuations in citations in the article is by the writer of the article.

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