Trying to be informed about finances and the economy can become challenging when abbreviations are used and not explained.

 

GDP stands for Gross Domestic Product.

This has become an abbreviation used to reference a point for the health of national and global economies. So, when GDP is growing this will mean workers and businesses are generally better off and the economy is usually stronger than when GDP is declining or not growing.

Real GDP growth moves in waves as the economy changes whether a boom happens or periods of slow growth which could lead to a recession. The UK recently came out of a recession which was a time where two quarters of the year suffered from output declines.

 

Current GDP

The Office for National Statists (ONS) report that the GDP is estimated to have grown by 0.4% in the three months to April 2024 compared with the three months to April 2023.

This means output is rising and explains the UK exiting the recession with the economy growing again.

 

Why is GDP important?

This measures the monetary value of final goods and services produced which transfer into the economy. Those products bought by the final user, the consumer which helps to boost the economy. This could be when you shop at the supermarket or go to a theme park. Those businesses make money from your spending as well as having to pay taxes etc. which essentially is paid back into the economy. GDP also includes some nonmarket production, such as defence or education services which is provided by the government

GDP is important as it gives information about the size of the economy and its performance. The growth rate of GDP can indicate how healthy an economy is.