Trading Academy Glossary

Gross domestic product

Gross domestic product

Gross domestic product (GDP) is a measure of the market value of all the final services and goods produced in a specific period by a country or economic area.

It’s a measurement of an economy’s size and health over a period, usually one quarter or one year. GDP is used to compare different economies’ size at various points in time.

What does gross domestic product mean?

GDP gets calculated in three ways: production, expenditure and incomes. Production would include factors such as domestic manufacturing, expenditure would include all government expenditure, and incomes would include personal and corporate income.

It’s then adjusted for inflation and population to provide deeper insights.GDP is a crucial tool for policymakers, businesses, investors and analysts in strategic decision making.

The standardised calculation of a country's GDP includes private and public consumption, government expenditure, private inventories, construction costs, investments and the foreign balance of trade; exports get added to the value and imports are subtracted.

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