The latest GDP, or Gross Domestic Product, figures have been released by Statistics SA. They show that GDP has increased by 0.9% meaning the recession is now over. This recession was our first one in 17 years and has placed massive strain on our economy. The recession was in part caused by the global financial meltdown, and our partial decoupling form the world economy due to instruments such as exchange controls and the National Credit Act have meant that we have not suffered as much as the rest of the world. So what do the figures say?
- GDP up by 0.9%
- Many sectors still down
- Overall figure shows recession is over
The GDP measurement has been re-weighted and the base line to which it is compared has been reset to 2005. Traditionally re-weighting tends to increase the overall GDP figure. For the first time these figures also include estimates of illegal activity including prostitution and drug sales. This is standard practise across most of the world although the figures can only be indirectly measured. GDP is the definition of how much, in monetary terms, an economy produces in a year. With the 'unobserved economy' now being included there are also estimates for the informal economy included.
The recession has been tough and now that we can see that it is over it is not time to go crazy and have a spending splurge. The economy won't fully recover into positive growth for some time yet, so stick to your budget plan and manage your debt. Debt was one of the major causes of the recession and even if the recession is over you would need to deal with your debt or you may find that you are one of the folk who do not emerge from the recession with the rest of the economy. Don't go mad with your credit card, rather compare credit cards to find a better value one. The festive season is coming, so don't forget to plan your budget with that in mind.
