About GDP

GDP is the final value of the goods and services produced within the geographic boundaries of a country during a specified period of time, normally a year.

GDP growth rate is an important indicator of the economic performance of a country.

How GDP is calculated (Formula/Method)

It can be measured by three methods, namely,

1. Output Method: This measures the monetary or market value of all the goods and services produced within the borders of the country. In order to avoid a distorted measure of GDP due to price level changes, GDP at constant prices o real GDP is computed.

{ GDP (as per output method) = Real GDP (GDP at constant prices) – Taxes + Subsidies }

2. Expenditure Method: This measures the total expenditure incurred by all entities on goods and services within the domestic boundaries of a country.

{ GDP (as per expenditure method) = C + I + G + (X-IM) }

C: Consumption expenditure,

I: Investment expenditure,

G: Government spending and (X-IM): Exports minus imports, that is, net exports.

3. Income Method: It measures the total income earned by the factors of production, that is, labor and capital within the domestic boundaries of a country.

{GDP (as per income method) = GDP at factor cost + Taxes – Subsidies}

From where is the GDP data sourced?

For the calculation of GDP at factor cost, data is taken from eight sectors, namely agriculture; mining and quarrying; manufacturing; forestry and fishing; electricity and gas supply; construction, trade, hotel, transport and communication; financing, real estate and insurance; and business services and community, social and public services. For the calculation of expenditure-based GDP, all the spending incurred on final goods and services are added that include consumer spending, government spending, business investment spending, and net exports.

The government releases quarterly GDP numbers every two months, and the final numbers for the whole year are issued on May 31.

(GDP vs. GNP and GNI)

Domestic (GDP)

"Domestic" (in "Gross Domestic Product") indicates that the inclusion criterion is geographical: goods and services counted are those produced within the country's border, regardless of the nationality of the producer. For example, the production of a German-owned factory in the United States will be counted as part of United States' GDP.

National (GNP)

In contrast, "National" (in "Gross National Product") indicates that the inclusion criterion is based on citizenship (nationality): goods and services are counted when produced by a national of the country, regardless of where the production physically takes place. In the example, the production of a German-owned factory in the United States will be counted as part of Germany's GNP (Gross National Product) in addition to being counted as part of United States' GDP.

GNI

GNI (Gross National Income) is a metric similar to GNP, since both are based on nationality rather than geography. The difference is that, when calculating the total value, GNI uses the income approach whereas GNP uses the production approach to calculate GDP. Both GNP and GNI should theoretically yield the same result.

Key Indicators of National Accounts

Chart/Graph

Source of Information: Bangladesh Bureau of Statistics