What is Gross Domestic Product (GDP)? Types, Calculation & Formula
What is GDP (Gross domestic product): We hear the term ‘GDP’ thrown around all the time—in newspapers, on TV, in government reports, and corporate discussions. But have you ever wondered what GDP really means and why it matters so much?
As an investor or financial professional, understanding Gross Domestic Product (GDP) is critical. It serves as a key barometer of a country’s economic health, influencing market trends, policy decisions, and investment strategies. But GDP isn’t just a number—it tells a story of economic activity, consumer confidence, and business performance. Let’s break it down.
What is Gross Domestic Product (GDP) Meaning?
Gross domestic product (GDP) is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.
A country’s Gross Domestic Product (GDP) is calculated by summing up various economic activities, including private and public consumption, government expenditures, investments, additions to private inventories, and construction costs. Additionally, the foreign Balance of Trade plays a crucial role, and significantly impacts GDP. When a country exports more goods and services than it imports, it experiences a trade surplus, leading to GDP growth. Conversely, a trade deficit occurs when imports exceed exports, often resulting in a decline in GDP.
In India, the National Statistics Office (NSO), which falls under the Ministry of Statistics and Programme Implementation (MoSPI), calculates the GDP of the country on a quarterly basis and releases it as a press release on specified dates.
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