National Accounts

The national account's building blocks are Gross Domestic Expenditure (GDE) and Gross Domestic Product (GDP).

GDE: is the total spending within an economy and there are three types of buyers of goods and services, namely.

Personal Consumption Expenditure (PCE), i.e. Households who purchase consumer goods and utilise services.

Economic agents, i.e. goods used for capital formation, including Gross Domestic Fixed Investments (GDFI) as well as the value of the change in inventories.

Government Consumption Expenditure(GCE) (the largest portion of wages and salaries of civil servants).

GDE = PCE + Investment + GCE + Residual item

(Investment = GDFI and the change in inventories)

(Residual item = adjustment to ensure the expenditure method and income method outcomes are the same).

GDP: is the total value of goods and services produced by the factors of production located in SA over a specified period. Because some part of domestic production is destined for foreign markets and therefore not sold in South Africa, exports are not included in the GDE and must be added to calculate the GDP.

On the other hand, some final expenditure is on goods imported from abroad. But the domestic product is the total of goods produced in the country, and imports should be excluded. So, to calculate GDP, the following equation is used:

GDP = GDE + Exports – Imports

To determine the country’s economic growth rate for a particular year, the percentage change in the real GDP between that year and the previous year is calculated, as shown in the table below: