What is GDP (gross domestic product)?
Short answer
Gross domestic product (GDP) is the total market value of all final goods and services produced within a country in a given period. It is the standard headline measure of the size and growth of an economy.
What is counted
GDP counts final goods and services, those sold to end users, so that intermediate inputs are not counted twice. It counts production inside a country’s borders regardless of who owns the producer. Statistical agencies publish it quarterly and annually; growth is usually quoted as the change in real GDP.
The expenditure formula
The expenditure approach adds up spending: household consumption (C), business investment (I), government spending (G) and net exports, which is exports (X) minus imports (M). The income and production approaches should give the same total.
GDP = C + I + G + (X - M)Nominal, real and per person
Nominal GDP uses current prices. Real GDP removes the effect of inflation, so it measures changes in the volume of output. GDP per capita divides by the population and is often used to compare living standards, though it does not capture income distribution.
What GDP leaves out
GDP does not directly measure unpaid household work, the informal economy, environmental damage or wellbeing. Figures are also revised as new data arrive, and different agencies use different methods, so cross-country comparisons carry caveats.