The formula to calculate the GDP Growth Rate (GDPG) is:
\[ GDPG = \left( \frac{GDPc - GDPp}{GDPp} \right) \cdot 100 \]
Where:
A GDP growth rate is defined as the rate of increase in the gross domestic product of a given country over a period-to-period basis.
GDP growth is a key indicator that the economy of a country is strong and growing. When GDP increases, the taxes that the country is able to collect also increase, which can then be put back into public services to improve the country. However, there are cases when GDP growth is not good, for example, when large amounts of inflation are causing the GDP to increase unnaturally.
A GDP growth rate can be negative if the GDP of the country or region decreased from the previous period being analyzed. A negative growth rate is almost always a bad sign that an economy is contracting.
GDP growth is not a direct cause of inflation; however, an increase in inflation will typically increase the GDP, but this does not mean that the economy is healthy.
GDP growth is important for the growth of a country as a whole. An increasing GDP means the economic output of the companies in that country is increasing. As the economic output increases, the economic positions of the people in the country also increase, which typically leads to more happiness and security.
Let's assume the following values:
Using the formula to calculate the GDP Growth Rate:
\[ GDPG = \left( \frac{1200 - 1000}{1000} \right) \cdot 100 = \left( \frac{200}{1000} \right) \cdot 100 = 20 \% \]
The GDP Growth Rate is 20%.