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If Vietnam's GDP last year was $1 billion, and this year it's $1.082b, that's an 8.2% growth. Lets assume that GDP is entirely from selling widgets. Last year
by iso1631 4y ago
If Vietnam's GDP last year was $1 billion, and this year it's $1.082b, that's an 8.2% growth.
Lets assume that GDP is entirely from selling widgets.
Last year they sold 108 billion widgets and received $1b dollars, 108 widgets for a dollar. They spend that $1b on 1 million units of oil.
This year they produce the same 108 billion widgets, but this time they will only say 100 widgets for a dollar, so they get 108b - 8% growth.
They then spend that $108b on 1 million units of oil (as oil is more expensive)
Has the economic output really grown 8%?
Or is it that they are still making 108 billion identical widgets as last year, so no change in output, just charging more, but the dollars they get will buy less oil?
Or are GDP figures adjusted for inflation?
- gruez 4y agoGDP figures are almost always quoted with inflation adjusted.
- iso1631 4y agoThat's great, it certainly isn't clear from the two paragraph article "HANOI (Reuters) -- Vietnam's gross domestic product grew 8.02% in 2022, the fastest pace annually since 1997, backed by strong domestic retail sales and exports. The reading is higher than an official growth target of 6.0%-6.5% and growth last year of just 2.58%, when COVID lockdowns left a dent on the economy and impacted factory activity."
- qwytw 4y ago> That's great, it certainly isn't clear from the two paragraph article Well I guess people writing these articles assume this is common knowledge.
- revnode 4y agoYour math is wrong. That said, economists differentiate between nominal and real growth. GDP reports growth that has already been adjusted for inflation. It represents an actual increase in more goods and services produced.
- cuchoi 4y agoThere are multiple measures of GDP. This must be Real GDP growth. Real GDP will either use the prices in a base year or a GDP Deflator to account for the changes in price.