GNP

Is the value of all the goods and services produced

in an economy, plus the value of the goods and
services imported, less the goods and services
exported.
GNP= gross domestic product + income earned by
domestic residents through foreign investments -
the income earned by foreign investors in the
domestic market.
In economics, a quantitative measure of a nation's total
economic activity, generally assessed yearly or quarterly.
Since World War II, GNP has been generally regarded as
the most important indicator of the status of an economy.
In the United States, the economy is considered to be in
recession if there are two consecutive quarters of
decrease in GNP. Despite the fact that GNP does not allow
for inflation, overall value of production, and other factors,
it is nevertheless a significant measurement of economic
health.
Gross domestic product, often confused with GNP, is
calculated from the total value of goods and services
produced in an economy over a specified period.
 GDP
A measure of a country’s overall economic output. It is the
market value of all final goods and services made within a
country in a year.

G = Gross
GDP measures production regardless of the various uses to
which the product can be put.

D = Domestic
GDP measures production that takes place within the
countries borders.
 CALCULATING GDP

nConsumption – household final consumption

expenditure under the categories: durable goods, non–
durable goods, and services.

nInvestment – includes business investment in

equipments.

nGovernment spending – sum of government

expenditures on final goods and services. Includes
public servants, purchase of weapons and investment
expenditure.
nExports – the amount of products a country produces
includes that which are used for other countries’
consumption.

nImports – deducted since they will be included either

in consumption, investment or government spending. It
is also deducted to avoid counting foreign supply as
domestic.
DIFFERENCES BETWEEN GDP AND GNI

•GDP does not include income of OFWs.

•GDP measures the total OUTPUT of the people
in a given country. GNI is the total INCOME of
all citizens regardless of location.

GROWTH RATE

This year’s GDP – last years GDP

Last year’s GDP
Balance of payments
 Balance of Payments

a record of the value of all economic

transactions that one country has with other
countries and international institutions
during a certain period.

it details total payments and receipts for

international trade, services and loans for
investment and summarises international
transactions
 Balance of Payments
• Transactions are divided into two groups:
1. Current account
-account shows the net amount a country is
earning if it is in surplus, or spending if it is in deficit. It
is also the sum of the balance of trade, factor income
and cash transfers.
-Imports Visible
-Exports Trade
-Services
-Tourism Invisible
-Interest payments Trade
-Dividends
-Remittances from OFW’s
 Balance of Payments

2. Capital Account
- records the net change in
ownership of foreign assets. It includes the
reserve account (the international operations
of a nation's central bank), along with loans
and investments between the country and the
rest of world
 Balance of Payments
• Sources of funds for a nation, such as
exports or the receipts of loans and
investments, are recorded as positive or
surplus items. Uses of funds, such as for
imports or to invest in foreign countries,
are recorded as negative or deficit item.

• The balance on each account is reached

by subtracting the payments from the
receipts, giving either a surplus or a
deficit.
 Balance of Payments
• When there is overall deficit, the
accounts must be adjusted to make
it equal.

• Not all deficits are bad, however, not

all surpluses are good.

• The BOP determines the exchange

rate. In the Philippines, the
exchange rate is the value of the
peso against the US dollar.
 NET INCOME FACTOR FROM
ABROAD

Net Factor Income from Abroad (NFIA) refers to the net

flow of property income to and from the rest of the
world (net payments on income) plus the net flow of
compensation of employees (net receipts on
compensation). The NFIA is added to the Gross
Domestic Product (GDP) to come up with the Gross
National Product (GNP).
Net Factor Income from the Rest of the World (NFIA)
consists of the net income receipts from the rest of the
world such as
(1) investment incomes including interest, dividends, and
branch profits
(2) earnings of residents working abroad
(3) other factor incomes of normal residents.

This item therefore represents the difference between

factor incomes of residents from abroad and the income
accruing to foreign suppliers of factor services.

(Source: NEDA)
PER CAPITA INCOME

- How much each individual receives, in

monetary terms.
-It is the measure of the amount of money that
each person earns in the country, of the yearly
income generated in the country.
 Per Capita Income=GDP/population

- The approximate per capita income of the

Philippines is $4,640 (2003) $2,100 (2007
- USA-$37,500
- Ranked 15th in Asia and 127th in the world