GDP measures the market value of a country’s economy. It includes all the products and services produced by a nation, including public and private consumption, investments and exports. The data is reported annually. This measure can be used to compare the performance of economies and nations, as well as predict future economic trends. GDP can also be adjusted for inflation, which makes it a more accurate measurement of growth.
The method of adjusting for inflation is called “purchasing power parity.” This approach allows for comparisons across countries and regions that have different prices. It also eliminates distortions caused by differences in currency. The US and China currently hold the top spots in both nominal and PPP rankings, with China surpassing the US in PPP terms.
While GDP is a useful indicator, it does have limitations. It does not account for all productive activity, such as under-the-table or black-market activities, household production and unpaid volunteer work. Also, it does not take into account quality improvements or the introduction of new products. For example, computers today are more powerful and less expensive than those of the past.
A broad array of analytical pieces, organized by subject matter, are available in this feature, which offers direct access to hundreds of articles from the biannual Global Economic Prospects reports published by the IMF. This archive covers topics such as the business cycle, monetary policy, fiscal policy, trade policy and more. This is a great resource for economists and students.