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Evolution of GDP
Gross domestic product (GDP) is the standard measure of the value of production by a country during a period. For the definition refer to Size of GDP. Growth of real GDP, i.e. ignoring price changes, is widely used to assess governments’ performance in managing their economies.
Definition
In order to calculate the growth rate of GDP free of direct effects of inflation, data at fixed, or constant, prices should be used. Price relativities change over time, and the 1993 System of National Accounts recommends that the fixed prices used should be representative of the periods for which the growth rates are calculated, which means that new fixed prices should be introduced frequently, typically every year. The growth rates of GDP between successive periods are linked together to form chain volume indices. All OECD countries derive their "volume” estimates in this way, except for Mexico, Turkey and the Slovak Republic. These three, like many non‑OECD countries, only revise their fixed weights every five or ten years. Such practices tend to lead to biased growth rates, usually upward.
The growth rates for OECD total and Euro area are averages of the growth rates of individual countries weighted by the relative size of each country’s GDP in US dollars. Conversion to US dollars is done using purchasing power parities so that each country is weighted by the relative size of its real GDP. Note that OECD total GDP excludes the Czech Republic, Hungary, Poland and the Slovak Republic because growth rates for these countries are not available for the full period.
Comparability
The GDP statistics used for these growth rates have been compiled according to the 1993 System of National Accounts, except for Turkey which still uses the 1968 SNA, and GDP estimates at current prices are generally regarded as highly comparable between countries. However, there is more variability in how countries calculate their volume estimates of GDP, particularly in respect of government consumption and some types of capital expenditures.
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Long-term trends Annual growth for OECD total averaged 2.6% from 1992 to 2005. Ireland and Korea substantially outperformed the average with annual growth of over 5%. Growth rates in Ireland were particularly impressive between 1995 and 2000 – the so-called Celtic Tiger period. Korea’s growth was badly affected by the financial crisis in Asia; real GDP fell by nearly 7% in 1998 but Korea has since returned to high rates of growth. Luxembourg, Poland and the Slovak Republic all recorded growth of over 4% per year. At the other end of the scale, four of the largest OECD economies – France, Germany, Italy and Japan – recorded average growth rates of 2% or less over the period. The Czech Republic, Hungary, Poland and the Slovak Republic all experienced substantial falls in real GDP in the early years of their transition to market-based economies but generally began to achieve positive rates of growth during the second half of the 1990s. Their growth rates are now among the highest of all OECD countries and are expected to remain above the OECD average through 2007. |
Sources
- OECD (2006), National Accounts of OECD Countries, OECD, Paris, www.sourceOECD.org/nationalaccounts.
- For non-member countries: national sources.
Further information
Analytical publications
- OECD (2006), Development Centre Studies – The Rise of China and India: What’s in it for Africa?, OECD, Paris.
- OECD (2007), OECD Economic Outlook: December No. 80 – Volume 2006 Issue 2, OECD, Paris.
- OECD (2007), Economic Policy Reforms: Going for Growth, 2007 Edition, OECD, Paris.
Methodological publications
- OECD (2007), Understanding National Accounts, OECD, Paris.
Online databases
Websites
- OECD Economic Outlook – Sources and Methods, www.oecd.org/eco/sources-and-methods.
| Texts | |
| • | Indicator web page |
| • | Indicator in PDF |
| Tables (xls) | |
| • | Real GDP growth |
| Graphics | |
| • | Real GDP growth |
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