You can compute growth rates for GDP and each of the components. The numbers are

Question

You can compute growth rates for GDP and each of the components. The numbers are reported quarterly but in the United States they are annualized. They are seasonally adjusted and adjusted for inflation. When they are adjusted for inflation, they are called "real". When they are not, it is called "nominal" GDP. To show the difference, consider a relatively simple example with just annual numbers. Suppose in 2004, we produced 8 oranges that cost .50 each. Nominal GDP =p*Q=8*.50=$4.00. Then, in 2005, we produced 10 oranges that cost .60 each nominal Nominal GDP= 10*.60= $6.00. Now we can compute the economy's growth rate in 2005. The formula is (current value-prior value)/prior value*100(multiply by a 100 to convert a decimal to a %). Nominal GDP growth =(6-4)/4*100=50%. But this is misleading as some of the increase was due to price changes. Real GDP growth represents the actual increase in production; here the increased orange production. Real GDP=(10-8)/8*100=25% This can also be computed by using 2004 as the base year and then the price index. Price Index=.60/.50*100=120(price index in 2005) Real GDP=Nominal GDP/ price index = 6/1.20= 5 Now Real GDP growth = (5-4)/4*100=25%(note the same as before) The global economy is challenged around the world and especially in Europe. Longer-term, Canada and Australia have had above average GDP growth for a wealthy country. The future prospects of these countries are solid as well. US growth following the recession have been weak, but 2018 looks better thanks to tax cuts and increased government spending. Choose any country. What was GDP growth for your country over the last 5 years? What was the GDP growth for your country over the last 20 years? What is the nominal GDP per capita? Explain why their GDP growth is either low or high. For example, growth in Argentina has disappointed due to policy mistakes, as well as drought conditions, which have hurt agricultural output. A strong US dollar has also adversely affected Argentina since it is a net borrower in global financial markets.

Explanation / Answer

Let us take the example of India, the fastest growing economy at the present. The Annual GDP growth rate of India as on July 2018 was at 8.2% as compared to 5.6% as on July 2017. Furthermore, the annual GDP in the year 1997 was at 410.32 USD Billion while it has risen to a whooping 2597.49 USD Billion as of the year 2017. What are the major reasons behind India's progress?

Increase in Agricultural output pertaining to better monsoons is a big factor as a majority of the rural population of India is still engaged in agriculture.

Tax reforms, GST is a significant factor driving the Indian economy towards a positive note. Disruptions came up in the Indian economy in the year first half of 2017 due to structural changes introduced in the form of Demonitisation and GST. These disruptions are wearing off and there has been an increase in demand in the domestic market.

The NDA Govenment has opened up numerous business opportunities because of which it has become very easy to set up small scale businesses. Also, large businesses have been able to increase their business activities with ease right from automobile sector to telecom sector.

There has been an increase in FDI flows into the country. The nation is progressing. There is a positive tide on. As such domestic consumption is also at a rise.

There has also been an increase in industrial output. There has been a lot of focus given to Infrastructural development with the Government allocationg Rs 5.97 lakh crore towards it.

These are some of the main reasons behind India's growth.

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