You are on page 1of 37

GROSS DOMESTIC

PRODUCT
PRESENTED BY:
RAJAT KAMAL (31)
RAJEEV RANJAN (32)
RAKESH RANJAN (33)
RANJEET SHAH (34)
RASIKA SALODKAR (35)
WHAT IS GDP?
THE GDP IS DEFINED AS THE MARKET
VALUE OF ALL FINAL GOODS AND SERVICES
PRODUCED WITHIN A COUNTRY IN A GIVEN
PERIOD OF TIME.

IT IS ONE OF THE MEASURE OF THE SIZE OF


THE ECONOMY.
IT IS AN INDICATOR OF ECONOMIC HEALTH
OF ANY COUNTRY.
IT CAN MEASURE SPENDING ON ALL GOODS
AND SERVICES OR IT CAN ALSO MEASURE
ALL INCOME EARNED .
MEASUREMENT :
GDP IS MEASURED BY NATIONAL
STATISTICAL AGENCY.
SUCH AS:
INDIA- MINISTRY OF STATISTICS
AND PROGRAMME IMPLEMENTATION
RUSSIA- FEDERAL SERVICE OF
STATE STATISTICS
BRAZIL- INSTITUTO BRASILEIRO
DE GEOGRAESTATISTICAIA
UNITED STATES- BUREAU OF
ECONOMIC ANALYSIS
TYPES OF
MEASUREMENT
EXPENDITURE METHOD:
 GDP= CONSUMPTION+ INVESTMENT+ GOVT.

SPENDIND+ (EXPORT-IMPORT)

INCOME METHOD :
 GDP= COMPENSATION OF EMPLOYEES +

GROSS OPERATING SURPLUS+ GROSS


MIXED INCOME+ TAX LESS SUBSIDIES ON
PRODUCTION AND IMPORTS
OR
 GDP= RENT+

INTEREST+PROFIT+STRATICAL
ADJUSTMENT+ WAGES
COMPONENTS
OF GDP
PRIVATE CONSUMPTION:
HOUSEHOLD EXP. SUCH AS FOOD,
RENT,MEDICAL EXP. ETC
INVESTMENT: CAPITAL
EXPENDITURE
GOVT SPENDING
CUMULATIVE EXPORT

CONTD…….
CONTD…….
COMPENSATION OF ENPLOYEE
GROSS OPERATING SURPLUS
MIXED INCOME
RENT
INTREST
PROFIT
STATISTICAL ADJUT(CORPORATE
INCOME
TAXES,DIVIDENDS,UNDISTRIBUTED
CORPORATE PROFIT)
WAGES
CROSS-BORDER
COMPARISION
 GDP OF DIFFERENT
COUNTRIES CAN BE
COMPARED BY FOLLOWING
METHODS:
 CURRENT CURRENCY
EXCHANGE RATE
 PURCHASING POWER PARITY
RATE
 GDP PER CAPITA
CONTD…
 CURRENT EXCHANGE RATE
METHOD CONVERTS THE VALUE OF
GOODS AND SERVICES USING
GLOBAL CURRENCY EXCHANGE
RATE.

 PPP- RELATIVE EFFECTIVE


DOMESTIC PURCHASING POWER OF
THE AVERAGE PRODUSER OR
CONSUMER WITHIN AN ECONOMY.
 GDP PER CAPITA IS GDP DIVIDED BY
THE AVERAGE POPULATION FOR
THE SAME YEAR.
DISADVANTAGES OF
PARAMETERS
 EXCHANGE RATE
 FLUCTUATION IN CURRENCY
EXCHANGE RATE
 PPP
 DOES NOT REFLECT THE VALUE OF
ECONOMIC OUTPUT IN
INTERNATIONAL TRADE
 IT REQUIRES MORE ESTIMATION
THAN GDP PER CAPITA
RANK BASED ON GDP
PER CAPITA
RANK COUNTRY GDP per capita ($ U.S)
1. LUXEMBOURG 69,800
2. NORWAY 42,364
3. U.S.A 41,399
7. CANADA 34,737
9. CHINA & HONG KONG 33,411
16. JAPAN 30,615
17. GERMENY 30,579
18. UNITED KINGDOM 30,470
20. FRANCE 29,316
22. SINGAPORE 28,100
33. SOUTH KOREA 20,590
62. RUSSIA 11,041
68. BRAZIL 8,584
122. INDIA 3,344
RANK BASED ON PPP
RANK COUNTRY PPP in million of U.S $
1. UNITED STATES 12,277,583
2. CHINA 9,412,361
3. JAPAN 3,910,728
4. INDIA 3,633,441
5. GERMENY 2,521,699
6. UNITED KINGDOM 1,832,792
7. FRANCE 1,830,110
8. ITALY 1,668,151
9. BRAZIL 1,576,728
10. RUSSIA 1,575,561
GDP & STANDARD OF
LIVING
 GDP PER CAPITA IS USED AS AN
INDICATOR OF STANDARD OF LIVING
IN AN ECONOMY
ADVANTAGES
 IT IS MEASURED FREQUENTLY,
WIDELY & CONSISTENTLY
 INFORMATION ON GDP IS
AVAILABLE ON A QUARTERLY BASIS
DISADVANTAGES
 DEFINITION OF GDP DOES NOT
SUGGESTS.
 MAKES GDP A PROXY FOR
STANDARD OF LIVING.
 DOES NOT TAKE INTO ACCOUNT
THE BLACK MARKET.
 IGNORES VOLUNTEER, UNPAID
WORK. EXAMPLE : LINUX
 QUALITY OF LIFE IS DETERMINED BY
MANY OTHER THINGS THAN
PHYSICAL GOODS & SERVICES.
HOW TO ACHIVE 10%GDP
GROWTH
1. SPECIAL ECONOMIC ZONES
FOR EDUCATION(SEZFE)
2. EMPOWERING RURAL INDIA
3. HEALTH CARE CITIES
4. RURAL MALLAS
5. INDUS ECONOMIC FREE
TRADE ZONE(IEFTZ)
AN ANALYSIS OF INDIA’S
GROSS
DOMESTIC PRODUT
1. (1980-81 TO 1990-91)
2. (1991-92)
3. (1993-94 TO 1998-99)
4. (1999-2000)
5. (2000-01 TO 2004-05)
CHANGING COMPOSITION
OF GDP
FORECAST TO FUTURE
FROM THE US AND OTHER
COUNTRY
FLUCTUATION IN
GDP
1. Innovation: Technological
Advancement
2. Political Events
3. Weather
4. War
5. Monetary policies
6. Government policies
7. International factors
…continued
8. Cumulative export.

9. Black markets.

10. Informal business practices.


…continued
11. Aggregate Demand

Consumer Confidence, Interest


C=Consumption Rate, Disposable Income, Stock
Market, Expectations

Interest Rate, GDP, Industry


I=Investment Conditions, Expectations

Requirements of political
supporters and budgetary
G=Gov’t constraints influence fiscal
policy decisions on both G and
Spending T (taxes)
PROJECTED US$ GDP PER
CAPITA GROWTH
Brazil China India Russia France Germany Italy Japan UK US
2000-05 9.8 9.2 3.7 7.0 2.2 1.4 2.7 1.1 3.0 2.6
2005-10 6.3 11.2 7.5 10.3 1.5 2.0 1.6 0.9 1.9
1.7
2010-15 6.4 9.2 7.4 8.1 1.5 1.6 1.7 1.2 1.9 1.3
2015-20 6.2 7.8 7.2 7.5 1.6 1.3 1.7 1.8 1.6 1.3
2020-25 4.6 7.3 7.4 6.1 1.6 0.9 1.2 1.8 1.2 1.4
2025-30 4.7 6.9 8.2 6.2 1.6 0.9 0.9 1.5 1.3 1.7
2030-35 5.2 6.5 8.9 5.2 1.6 1.7 0.8 1.0 1.7 1.9
2035-40 5.3 6.3 8.9 4.3 1.9 2.0 1.3 1.2 2.0 2.0
2040-45 5.0 5.9 8.3 3.6 1.9 1.9 1.8 1.6 1.8 1.9
2045-50 4.9 5.4 7.6 3.4 2.0 1.8 2.1 2.0 1.7 1.9
 ProjectedUS$GDP Per Capita Growth: 5-Year Averages

 Average

 %yoy

 BRICs VS G6

`
BRICs ECONOMIC
TREND
LARGER FORCE IN THE WORLD ECONOMY.
GROWTH IN PER CAPITA INCOME & CURRENCY
MOVEMENTS.
LARGER THAN THE G6 IN US DOLLAR.
KEY CHALLENGES IS DEVELOPMENT ON TRACK.
DUE TO SLOW DOWN IN ECONOMIC GROWTH IN
DEVELOPED COUNTRY.
INVESTMENT PORTFOLIOS INCREASED.
BRIC ARE EMERGING MARKET.
DRAMATICALLY DIFFFERENT
WORLD
ECONOMIC SIZE
ECONOMIC GROWTH
INCOMES AND DEMOGRAPHICS
GLOBAL DEMAND PATTERNS
CURRENCY MOVEMENTS
BY 2025 BRICs ECONOMIES OVER HALF AS
LARGE AS THE G6
BY 2040 OVERTAKE THE G6
THE CONDITION FOR
GROWTH
MACRO STABILITY
INSTITUTIONS
OPENNESS
EDUCATION
GROWTH IN EMPLOYMENT
GROWTH IN THE CAPITAL STOCK
TECHICAL PROGRESS(OR TOTAL FACTOR
PRODUCTIVITY GROWTH)
BRICs REAL GDP GROWTH
% Brazil China India Russia
 2000-2005 2.7 8.0 5 .3 5.9
 2005-2010 4.2 7.2 6.1 4.8
 2010-2015 4.1 5.9 5.9 3.8
 2015-2020 3.8 5.0 5.7 3.4
 2020-2025 3.7 4.6 5.7 3.4
 2025-2030 3.8 4.1 5.9 3.5
 2030-2035 3.9 3.9 6.1 3.1
 2035-2040 3.8 3.9 6.0 2.6
 2040-2045 3.6 3.5 5.6 2.2
 2045-2050 3.4 2.9 5.2 1.9
 GSBRICs Model Projections. .
 BRICsReal GDP Growth: 5-Year Period Averages
GOLDMAN SACHS VS
LEVINE RENELT MODEL

30 year average
Real GDP Growth
GOLDMAN SACHS LEVINE-RENALT MODEL
Brazil 3.7 3.3
Russia 3.9 3.5
India 5.8 5.3
China 5.6 5.8
Comparing Our Projections With the Levine-Renelt Model
CHALLENGES FOR BRICs
MUCH LESS OPEN TO TRADE
INVESTMENT AND SAVING ARE
LOWER
PUBLIC AND FOREIGN DEDT
ARE MUCH HIGHER
POPER GOVT POLICY
WRAPPING UP
IT MEASURE ECONOMIC
HEALTH
BRICs WILL OVERTAKE G6
DETERMINES THE STANDARD
OF LIVING
UNDERSTANDING THE GLOBAL
DEMAND PATTERN
IT HELPS TO BE CYNOSORE IN
THE GLOBAL ECONOMIC
 WAIT……………
WILL INDIA BECOME SUPERPOWER LIKE USA?