GDP (gross domestic product)

GDP adds up the market value of everything produced in an economy, counting only final goods and services so that inputs are not counted twice. It can be measured three ways that should in principle agree: total output, total income earned and total spending. The spending version is the most familiar: consumer spending plus business investment plus government spending plus exports minus imports. Statistics agencies publish GDP quarterly, often with early estimates that are later revised, and report growth in real terms, after removing the effect of rising prices.

GDP growth is the headline indicator of whether an economy is expanding or shrinking, and it shapes central bank decisions, government budgets and company profits. It has well-known limits. It ignores unpaid work, does not show how income is shared, and says nothing about wellbeing or environmental costs. GDP per person is a better guide to living standards than total GDP, which rises with population. For investors, the link between a country's GDP growth and its stock market returns is weaker than many assume, because listed companies often earn much of their profit abroad and share prices already reflect expected growth.