Have you ever heard of GDP? It is common to hear this acronym when the subject is economics. However, this concept is still very confusing for some people. GDP, or Gross Domestic Product, is an economic indicator that represents the sum of all goods and services produced in a given location (country, state, city, municipality) over a period, usually Yearly.
The analysis of the GDP allows to identify the growth, decrease or stagnation economy, as well as making comparisons between certain geographic areas. Thus, it is possible to point out the level of economic development of each location based on what was produced.
However, it is necessary to reinforce that GDP does not represent "stored money", therefore, if, in a given period, a country, for example, does not produce anything, its GDP will be 0. This economic dynamic can be observed according to this index and its segmentations, which are the GDP per capita, O nominal GDP it's the real GDP. Let's find out what each of them means?
GDP in the economy
The GDP has the function measure the value of what was produced in a particular location. This measurement allows you to assess the level of wealth of a place, but it does not mean that it is wealth itself, what it does is investigate the behavior of the economy based on production.
The result obtained through the GDP calculation (which we will talk about below) provides data that indicate the growth (or not) of the economy, also enabling them to be comparisons and possible diagnoses as to failures in economic sectors, as well as the potential in each of them — in the primary sector, with the agriculture or livestock; in secondary, with the industries; or in the tertiary, with the provision of services.
Let's see a example: the discovery of Petroleum in a certain place, like the Brazilian pre-salt, can boost the economy, making the GDP point to a huge growth based on the production of fossil fuel that can be sold to other regions. If the diagnosis performed indicates stagnation or decrease when compared to a previous period, the GDP may be a path for possible analysis regarding economic problems, such as low industrial production, that are being experienced at the site, as well as for the elaboration of strategies in order to rebuild the economy.
However, remember, GDP only points to economic development. The development of a country, state or city as a whole is much more complex and comprises not only the economy but also social questions, such as quality of life, education, income distribution, among others.
How is GDP calculated?
The GDP calculation takes into account numerous variables, therefore, it is not a simple calculation. It can be done in three ways, and for the three possible calculations, the achieved result must be the same. They are, in a simplified way:
1) According to the offer: make the sum of what is produced, considering the three sectors of the economy, ie
Primary sector (agriculture) + secondary sector (industry) + tertiary sector (services) = GDP |
In this calculation, the raw material used for production, but the final product of each sector.
2) According to demand: add up everything that is spent in the country. Internal expenses with regard to the consumption of the inhabitants, the government and private companies that invest are considered. Look:
C + I + G + (X-M) = GDP |
C = household consumption; I = business investment; G = government spending; (X-M) = trade balance - exports - imports |
In this calculation, imports made by the country are also considered (these are nothing more than purchases or receipts from goods, products or services), that is, they refer to the entry of goods into national territory from a territory foreign.
3) According to income: adds up taking into account the wages, interest and distributed profits (Gross Exploration Surplus).
Remuneration + Gross Operating Surplus = GDP |
In this calculation, it is considered that the remuneration is able to pay not only for the food that is sold in restaurants but also for the service attributed to it, the profit obtained from the establishment and the costs of the production.
It is important to say that, so that the same product is not counted twice, the calculation of GDP takes into account only the final goods and services. For example, if the GDP of a place were the production of a garment, we would have:
Cotton (R$100), thread (R$200) and clothing (R$300). This means that the GDP will be R$300 and not R$600, since the value of cotton and thread, produced and used for manufacturing, is already included in the final value of the clothing.
In summary, the calculation takes into account:
- Goods and final products
- Services (paid activities)
- Investments made by private companies or the government
- Government spending to meet population demands
And the calculation does not take into account:
- Intermediate goods (raw materials)
- unpaid services
- Goods that already exist (such as a house, which is only accounted for when it is built and not when it is resold).
- informal activities
Read too:Do you know the difference between import and export?
Brazil's GDP
THE Brazilian economy is, according to the GDP, the ninth largest in the world and the second largest on the American continent, second only to the United States. According to the International Monetary Fund, the country's GDP is $1.869 trillion. The Brazilian GDP per capita is BRL 31,587. The country's economy is mainly based on the service sector, corresponding to approximately 65% of the Brazilian GDP.
However, it is important to highlight the role of the primary sector for the country's development. O agribusiness finds itself in a prominent place in the economy. Much of the Brazilian production, whether in agriculture, with soy, for example, or in livestock, with cattle raising, is turned to the external market. In 2018, the country consolidated itself as the largest soy exporter in the world, corresponding to 56% of world exports, according to the World Trade Organization.
About the industry sector, not least and responsible for about 28% of the country's GDP, car, steel, petrochemicals, aircraft, among others, stand out. The economy is also maintained through the exploration of mineral resources, abundant in the country, such as iron, copper, nickel, tin, and now oil, found in deep water, known as Brazilian pre-salt.
Currently Brazil has been facing a economic stagnation amidst the troubled political scenario experienced in recent years, associated with the corruption scandals. The country is in the 40th position of the Gross Domestic Product growth ranking, which indicates growth of just 0.1% in 2018, well below the global average of 3.7%.
See too:Know what agribusiness is and its importance to Brazil
→ Brazilian GDP Table
Year |
GDP in US$ |
2000 |
655.42 billion |
2005 |
891.63 billion |
2010 |
2,209 trillion |
2011 |
2.616 trillion |
2012 |
2.465 trillion |
2013 |
2.473 trillion |
2014 |
2.456 trillion |
2015 |
1.802 trillion |
2016 |
1.796 trillion |
2017 |
2.054 trillion |
2018 |
1.869 trillion |
Data: world Bank
world GDP
There are large economies in the world spread across continents. Brazil, as said, is in the ranking of the largest global economies, being among the 10 largest. See the GDP list of countries with the largest economies, according to the World Bank|1|:
1º - U.S (US$20,494 trillion)
2nd - China (US$ 13.608 trillion)
3rd - Japan (US$4.971 trillion)
4th - Germany (US$3.997 trillion)
5th - United Kingdom (US$2.825 trillion)
6th - France (US$2.778 trillion)
7th - India (US$2.726 trillion)
8th - Italy (US$2.074 trillion)
9th - Brazil (US$1.869 trillion)
10th - Canada (US$1.709 trillion)
Read too:Know what developed countries are and how their GDP is
What is nominal GDP and real GDP?
GDP can be divided into nominal GDP is on Real GDP. The first refers to the value obtained through the calculation performed based on the current prices, considering the year in which the product was produced and marketed. Nominal GDP takes into account price variations according to inflation Or the deflation.
already the real GDP refers to the value obtained through the calculation performed based on the constant prices. Choose a certain year and does not take into account the effect of inflation. This is the way most used by economists to assess the economy of a given place, since the calculation of production is made without considering the many variations throughout the year.
See too:Important social development indicator: Birth and mortality rate
GDP per capita
GDP per capita is, like GDP, an economic indicator obtained through the division of the GDP of a given place by the number of inhabitants. Basically, this indicator indicates what each inhabitant would have produced during the year, and is therefore used to indicate the standard of living of the population in question.
However, a deep analysis when using the GDP per capita as a reference for the degree of development of an area, since the number of inhabitants must be taken into account.
For example, if a country produces a lot and therefore has a high GDP, but it is densely populated, the GDP tends to be lower. However, this does not mean that the quality of life in this country is bad. Just as it can happen that a country has an average GDP, as in the case of Denmark (US$ 324.9 billion), and presents a high GDP per capita, due to the low population of the territory.
Know more:Discover the difference between populated and populated
Grades
|1| World Bank – GDP. To access, Click here.
