SA adds drugs and prostitution to growth figures

South Africa included figures for drugs and prostitution in its economic growth calculation for the first time, but analysts said the estimated $465 million for illegal activities last year was too low.
Statistics South Africa said illegal and underground activities make up only 0.2% of the economy in the country, which has one of the world’s highest rates of violent crime.
Analysts immediately cast doubt on the estimate of R3.5 billion for 2008.
“I think it is a bit conservative,” said Freddie Mitchell, economist at research group Efficient.
“The international community sees South Africa as a haven for drugs, so I think 3.5 (billion rand) is a bit of an underestimation.”
The statistics agency released previously “non-observed” activities in its gross domestic product calculations for the first time, in line with international standards.
The new category includes many activities like prostitution, abalone poaching and the growing and selling of drugs.
Carjacking is common in South Africa and drug use is rife in some areas and among young people. Marijuana is seen as a cash crop in many rural areas.
Stats SA said in the release of third quarter data, which also revised and rebased previous figures that Africa’s biggest economy measured R2.284 trillion, of which illegal activities make up 0.2%.
It stressed the figure was an estimate and could not give a breakdown of specific activities, including prostitution.
“It’s difficult enough to estimate normal GDP before delving into the dark world of organised crime and illicit activities,” said Russell Lamberti, an economist at market analysts ETM.
“We appreciate what they are trying to do but we need to treat the figures with caution,” he said.