What is GDP?
Watch the video
Gross domestic product (GDP) refers to the main indicators used to assess the state of the economy in a country. Let's talk more about what GDP is and what this indicator means.
GDP indicates the total cost of services and goods that were produced in the state for a given period of time. GDP is usually expressed by comparison with the previous quarter or year. Example: if during a year GDP grew by 5%, this means that the economic situation improved by 5%.
GDP includes the value of all tangible and intangible goods. Not included in GDP are spending on goods purchased in the past years, and spending on the purchase of intermediate goods (materials, fuel, energy, etc., which are used to produce the final product).
Types of GDP
Nominal and real GDP
Nominal GDP - the cost of all services and goods in a particular region or state, is determined by market prices. Nominal GDP is dependent on changes in the price and income index. It grows with inflation due to rising prices for products and services and decreases due to falling prices.
With real GDP, it is taken into account exactly how the growth of GDP depends on the growth of production, and not on the rise in prices.
GNP - gross national product
It reflects the total value of goods created by its residents, regardless of their location.
GDP per capita
An important indicator of economic well-being in a region or country. To calculate it, GDP should be divided by the number of people. For comparing data in different countries for this indicator, GDP is calculated using PPP.
GDP at PPP
PPP (purchasing power parity) is the ratio of two or more monetary units of different states, which is determined by their purchasing power applicable to certain services and goods.
Usually, the calculation of income and expenditure GDP. Income GDP is the total amount earned in a year. Expenditure GDP is calculated by calculating the amount of what was spent for the year. Also, GDP is often calculated by value added.
How GDP is calculated, you can read in the article How to calculate GDP.
If we consider the data for 2013, then we can give the GDP ranking (by PPP) from first to ninth place:
If we consider the GDP per capita, then the first line of leaders will be occupied by Qatar, Luxembourg and Kuwait. Russia in this ranking takes 44th place.