GDP (Gross Domestic Product)
Full form: Gross Domestic Product
GDP stands for Gross Domestic Product. It is the total value of all goods and services produced inside a country in a period, usually a quarter or a year. It is the standard measure of the size of an economy, and its growth rate shows how fast the economy is expanding or shrinking.
What GDP counts
GDP adds up the value of what is produced within the country's borders: the things made, the services provided, and the output of government. It counts final goods and services, so a part sold to a factory is not counted twice on its way to becoming a finished product.
Nominal, real and growth
Nominal GDP uses today's prices, so it rises when prices rise. Real GDP removes the effect of inflation, so it shows whether the country actually produced more. The GDP growth rate you see in the news is the change in real GDP from one period to another, shown as a percentage.
Who publishes it
In India the government's statistics office publishes GDP estimates every quarter, with annual figures and later revisions. The numbers are estimates, and they can be revised.
Why markets watch it, and its limits
Faster growth usually means more sales and profit across companies, and slower growth the opposite, so GDP shapes the mood around shares and interest rates. But it is a broad average. It does not say how income is shared, and the stock market often moves on expectations before the figures are published, so a good GDP number does not mean shares will rise.
Reading a growth figure (hypothetical numbers)
Suppose a country's real GDP was ₹200 lakh crore last year and ₹212 lakh crore this year. Growth is (212 minus 200) divided by 200, which is 6 percent. If prices rose 5 percent over the same period, nominal GDP grew faster than 6 percent, but the 6 percent is the real growth, the part that is not just higher prices.
Common questions
- What is the full form of GDP?
- Gross Domestic Product.
- What does GDP measure?
- The total value of goods and services produced inside a country in a period.
- What is the difference between nominal and real GDP?
- Nominal GDP uses current prices. Real GDP adjusts for inflation, so it shows the actual change in output.
- Does high GDP growth mean share prices will rise?
- Not necessarily. Markets look ahead and move on expectations, so the link is loose.