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South Africa's economy has entered recession for the first time in eight years, official data showed on Tuesday, piling pressure on a government facing corruption allegations and credit downgrades. Experts say GDP remains a key measure, but cannot be the only measure to evaluate a country’s economic condition.
South Africa's economy contracted by 0.7 percent in the first three months of 2017 after shrinking by 0.3 percent in the fourth quarter of last year, lagging market expectations of a quarter-on-quarter GDP expansion of 0.9 percent.
GDP is showing negative growth. But experts said that it would be “misleading” to measure a country’s economic performance solely by GDP numbers.
"We need to really look at GDP in context with other measures because alone it's a very cold measure. It's misleading," said Lumkile Mondi, the senior lecturer at Wits University.
Meanwhile, experts also believed advanced technology will bring about a decline in overall GDP figures since digital services are not accounted for. That could lead to something of a paradox, according to Lorenzo Floramonti, a political economy expert at Pretoria University.
“Our measure of success as GDP encapsulates that is still seen as going backward because it is only linked with more and more spending and development," said Floramonti.
Another area in question is income. While the goal for all countries is to raise income, the cost of growing that income is also not calculated.
"Most of our economies have based their GDP growth on selling our natural resources and destroying the environmental ecosystems. And while this is seen as a plus in terms of GDP, everybody understands that this is a minus," Floramonti added.
GDP also creates a direct link to employment. A low GDP impedes a country's ability to create jobs. But Floramonti stressed “how we create good jobs, how we share the wealth, and how we treat natural resources sustainably” could not be measured by GDP figures alone.
GDP was developed during the industrial age and first used by the US in 1930. But while the metric remains a key measure globally, is it still relevant in today's world? “The future is really about building a totally different set of measurements that are more in line with what a country, a society, a continent wants to do,” Floramonti told CGTN.
(CGTN)
