Gross domestic product (GDP) per capita and GDP per capita annual growth rate (2024)
What do these indicators tell us?
GDP per capita and GDP per capita annual growth rate are widely used by economists to gauge the health of an economy. The annual growth rate of real GDP per capita is included as an indicator for SDG 8: "Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all".
GDP per capita, purchasing power parity (PPP) (current international $) - This is the GDP divided by the midyear population, where GDP is the total value of goods and services for final use produced by resident producers in an economy, regardless of the allocation to domestic and foreign claims. It does not include deductions for the depreciation of physical capital, or the depletion and degradation of natural resources. PPP indicates the rate of exchange that accounts for price differences across countries, allowing for international comparisons of real output and incomes. An international dollar has the same purchasing power in the domestic economy as the US dollar has in the United States. PPP rates allow for standard comparisons of real prices among countries, just as conventional price indexes allow for comparisons of real values over time. The use of normal exchange rates could result in overvaluation or undervaluation of purchasing power.
GDP per capita annual growth rate - This is defined as the least-squares annual growth rate, calculated from the constant price GDP per capita in local currency units.
What are the consequences and implications?
Higher income is usually associated with lower rates of malnutrition. Improving income, however, reduces malnutrition to only a small degree (World Bank, 2006). For example, when the gross national product (GDP plus the net factor income residents receive from abroad for factor services [labour and capital], minus the income earned by foreign residents contributing to the domestic economy) per capita in developing countries doubled, the nutrition situation did improve, but reductions in underweight rates were only modest. On the basis of the correlation between growth and nutrition, it is estimated that sustained per capita economic growth would indeed reduce malnutrition, but not by a drastic amount. These estimates suggest that countries cannot depend on economic growth alone to reduce malnutrition within an acceptable time.
Source of data
World Bank. DataBank: World development indicators (http://databank.worldbank.org/data/home.aspx).
Growth is calculated from constant price GDP data in local currency. Sustained economic growth increases average incomes and is strongly linked to poverty reduction. GDP per capita provides a basic measure of the value of output per person, which is an indirect indicator of per capita income.
GDP per capita annual growth rate - This is defined as the least-squares annual growth rate, calculated from the constant price GDP per capita in local currency units.
A nation may have consistent economic growth but GDP per capita growth will be negative if its population is growing faster than its GDP. This isn't a problem for most established economies because even a tepid pace of economic growth can still outpace their population growth rates.
Real GDP per capita is calculated by dividing GDP at constant prices by the population of a country or area. The data for real GDP are measured in constant US dollars to facilitate the calculation of country growth rates and aggregation of the country data.
GDP per capita could increase at a faster pace than GDP if the population is decreasing or if GDP decreases while the population is unchanged or increases.
The economic growth rate (GDP growth), then, refers to the percent change in real GDP, which corrects the nominal GDP figure for inflation. Real GDP is therefore also referred to as inflation-adjusted GDP or GDP in constant prices.
GDP growth rate refers to the pace at which a country's Gross Domestic Product (GDP) expands or increases over a specific period, usually measured annually or quarterly. Gross Domestic Product (GDP) is the market worth of all final services and products produced within its boundaries over a certain period.
The answer to both questions depends on whether GDP is growing faster or slower than population. If population grows faster than GDP, GDP increases, while GDP per capita decreases. If GDP falls, but population falls faster, then GDP decreases, while GDP per capita increases.
Measuring GDP. GDP measures the monetary value of final goods and services—that is, those that are bought by the final user—produced in a country in a given period of time (say a quarter or a year). It counts all of the output generated within the borders of a country.
Gross domestic product tracks the health of a country's economy. It represents the value of all goods and services produced over a specific time period within a country's borders. Economists can use GDP to determine whether an economy is growing or experiencing a recession.
Since real GDP measures the quantity of goods and services produced, it is common to use GDP per capita, that is real GDP divided by population, as a measure of economic welfare or standard of living in a nation.
GDP per capita stands for Gross Domestic Product (GDP) per capita (per person). It is derived from a straightforward division of total GDP (see definition of GDP) by the population.
Per capita GDP is a measure of the total output of a country that takes gross domestic product (GDP) and divides it by the number of people in the country.
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