GDP provides a snapshot of a country’s economy and is widely followed by economists, analysts, investors, and policymakers. The release of GDP figures is often one of the most anticipated economic data releases of the month and can move markets.
GDP measures a nation’s economic output and growth. It is calculated as a sum of the value of all final goods and services produced within the country in a given period, including both private and public consumption, investment, and government expenditures. GDP excludes non-market activities such as household production, bartering, and unpaid volunteer work. It also does not take into account any activity that takes place outside of the market, such as black-market or under-the-table transactions, nor does it include the value of natural resources or pollution.
Moreover, GDP does not adjust for quality improvements and the introduction of new products, which can have significant impacts on citizens’ well-being. In addition, it ignores the value of a nation’s natural capital and disregards business-to-business activities. For these reasons, GDP is only one of a suite of indicators that should be used to assess a nation’s economic performance and progress towards sustainable development.
Global economic growth is expected to slow this year and next, partly due to higher tariffs, lower oil prices, and geopolitical tensions. Slowing economic growth will impede developing economies’ efforts to reduce poverty and close their per capita income gaps with advanced economies. Reviving growth will require a combination of measures, including implementing sound macroeconomic policies, improving business climates, boosting productive employment, and investing in skills development and infrastructure.