10/27/20
Description of some new Gross Domestic Product (GDP) charts covering a number of major economies and the world as a whole.
Gross Domestic Product, or GDP, is one of the most widely quoted economic statistics. It is a measure of the market value of all final goods and services produced by a nation in some time period. GDP is often thought of as the "size" of the economy. (See Topic - U.S. GDP for a more detailed discussion of GDP in the context of U.S. GDP.)
World GDP is a summation of the GDPs of all nations. Because national GDPs are often measured in different currencies, they must be converted to some common unit before they can be combined. One way to do this is to convert all currencies into U.S. dollars (USD) at official exchange rates. This is what is done in the next few charts as denoted by reference to "USD GDP."
In addition, inflation changes the value of currencies over time making it difficult to see what the real growth of GDP is over time. Inflation indices can be calculated and used to adjust nominal GDP values into inflation adjusted or "real" values. This is what is done in the next few charts as denoted by reference to "Real".
The following chart shows the annual Real USD GDP for the entire world. This chart use useful as an estimate of the size of the world economy.
In addition to the size of the world economy, it is useful to have an estimate of the growth rate of the world economy. The next chart shows the annual growth rate of the world economy by calculating the percent difference in adjacent data points of the previous chart.
Of course, the world economy is composed of a large number of national economies. The next chart shows the GDPs (Real, USD) of some of the larger national economies and economic areas.
Converting national GDPs into U.S. dollars at official exchange rates is not the only way to convert them to a common unit. Another way to do to is to convert them to International Dollars (Intl$). International Dollars (Intl$) are calculated for each currency by converting into U.S. dollars using Purchasing Power Parity (PPP). Purchasing Power Parity is determined by the price of a basket of goods. So, if the basket of goods cost 1000 U.S. dollars in the U.S. and the same basket of goods cost 500 Yuan in China, then 500 Yuan of GDP in China would be converted into 1000 U.S. dollars using PPP. The next chart is the same as the previous chart except that it uses International Dollars (Intl$) and thus PPP. The primary difference between these two charts is that China's economy is much larger relative to the others when measured via PPP.
Again, it is useful to have estimates not just of the size of economies but also the growth rates. The next chart shows the annual growth rate of these economies by taking the percentage change of adjacent annual GDP data points. This chart uses USD instead of PPP, but the PPP based chart is almost identical.
For more GDP discussion and analysis with a U.S. context, see Topic - U.S. GDP .