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We take a look at the latest manufacturing production and sales data as published by Statistics South Africa. So is South Africa producing more goods than what they did say 5 years or even 10 years ago? We take a look.
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Are we producing more goods than what we did 5 or 10 years ago?
The line chart below shows the monthly index of volumes of goods produced over time. An index level of 100 shows that the volume of goods produced is exactly the same as the average volume of goods produced in 2015. A figure higher than 100 shows that the volume of goods produced during a specific month is more than the average volume of goods produced during 2015, while a figure lower than 100 shows that the average volume of goods produced is less than the average volume of goods produced during 2015.
The line chart also shows a moving average line, which is the average of the preceding year's index levels, and the moving average is used to smooth out the series so that it removes variation in the index of volume of goods produced caused by seasonal patterns, such as increased production before the Christmas holidays, and decreased production during December and January when people are on leave. So basically the moving average shows the underlying growth in the volume of goods produced index.
The line chart also shows a moving average line, which is the average of the preceding year's index levels, and the moving average is used to smooth out the series so that it removes variation in the index of volume of goods produced caused by seasonal patterns, such as increased production before the Christmas holidays, and decreased production during December and January when people are on leave. So basically the moving average shows the underlying growth in the volume of goods produced index.
As the Index of volumes of goods produced and moving average line shows, there was a significant decline in the volume of goods produced during 2008 and 2009, thanks largely due to the financial crisis that originated in the USA from the sub prime mortgage crises which spread across the world and the contagion of the financial crises impact global economic growth heavily for a substantial period of time. While other economies recovered from this pretty rapidly, as the red moving average line shows, South Africa's recovery from this has been very very slow. And more evidence of this can be seen in the economic growth rate achieved by South Africa in recent years, with the country struggling to post year on year economic growth rates of around 2% in the last couple of years and the annual growth being revised downwards regularly. SA is predicted to grow in 2018 for the full year at less than 1% and 2019 estimates of SA's growth is predicted to be around the 1% mark.
This while other BRICS countries such as China is growing at 6% and India growing at well over 7% per year. Basically in terms of economic size South Africa as a country is becoming more and more irrelevant as other countries grow at rates a lot faster than SA, leaving South Africa behind. The impact on South Africans is the fact that the population is growing faster than the economy this the share of South Africa's economic pie per person is declining. Essentially the average South African is getting poorer and poorer. The average growth in SA for the first three quarters of 2018, compared to the first three quarters of 2017 is 0.76%, while SA's population grew by 1.56% from 56.83 million people in 2017 to 57.72 million people in 2018.
Underlying growth in the volume of goods produced in SA, as measured by the moving average increased by 1.29% in the last year, less than the population growth, but encouragingly more than the SA's economic growth rate, which could be a positive omen for SA's economy if production of goods, for local consumption and/or the export market starts increasing, it could stimulate growth
This while other BRICS countries such as China is growing at 6% and India growing at well over 7% per year. Basically in terms of economic size South Africa as a country is becoming more and more irrelevant as other countries grow at rates a lot faster than SA, leaving South Africa behind. The impact on South Africans is the fact that the population is growing faster than the economy this the share of South Africa's economic pie per person is declining. Essentially the average South African is getting poorer and poorer. The average growth in SA for the first three quarters of 2018, compared to the first three quarters of 2017 is 0.76%, while SA's population grew by 1.56% from 56.83 million people in 2017 to 57.72 million people in 2018.
Underlying growth in the volume of goods produced in SA, as measured by the moving average increased by 1.29% in the last year, less than the population growth, but encouragingly more than the SA's economic growth rate, which could be a positive omen for SA's economy if production of goods, for local consumption and/or the export market starts increasing, it could stimulate growth