\[G=\frac{GDP_2-GDP_1}{GDP_1}\times100\]
Variables
GGDP growth rate (%)
GDP1initial gross domestic product
GDP2final gross domestic product
Description
What is this formula?
The GDP Growth Rate measures the percentage change in Gross Domestic Product between two periods.
It is one of the most widely used indicators of economic performance and economic expansion.
When to use it
Use this formula to evaluate economic growth, compare economic performance across years, and assess the effectiveness of economic policies.
Example
GDP in year 1:
GDP1 = 2.5 trillion USD
GDP in year 2:
GDP2 = 2.65 trillion USD
Formula:
G = ((GDP2 - GDP1) / GDP1) × 100
Substitution:
G = ((2.65 - 2.50) / 2.50) × 100
G = 6%
Result:
The economy grew by 6% during the period.
Applications
- Economic growth analysis
- Government policy evaluation
- International comparisons
- Economic forecasting
- Macroeconomic research