Answer to Question #234932 in Macroeconomics for Cate

Question

The following data relate to the South African economy.

2012

R 3 253 851m

2019

R5 077 625m

29

17.9

14.6

R54906

58.56m

GDP at market prices

Unemployment rate % 24.7

Gross Fixed Capital Formation as % of GDP

Gross savings as a % of

GDP

GDP per capita at constant 2010 prices

Population

19.2

14.8

R55543

52.83m

Source: SARB Quarterly Bulletins and World Bank

write an interpretative essay on South Africa's macroeconomic conditions over the 2012-2019 period. In your essay, also explain how GDP is measured when one uses the output method, and comment on the extent to which a change in GDP reflects an improvement in citizens' welfare.

Answer 1

Back in 2012, the economic growth rate of South Africa was slow and high levels of poverty were evident. The GDP expectancy remained low and the poorest about 20 percent of the population did not seem to have their share of total income rise. However, the South African economy has displayed resilience and has continued to expand at a moderate rate. GDP growth has been falling from about 4 percent in 2010 to about 1.2 percent in 2018. The unemployment rate was high especially in 2019 after the outbreak of COVID-19.

The following method shows how Gross Domestic Product (GDP) is measured using the output approach Formula: Y=C+I+G+(X–M)

It involves the addition of the total consumption, total investment, government spending, and gross exports.

The government has chipped in to support and improve the economic conditions hence there has been a consistent increase in GDP leading to better living standards for the citizens.