GDP Adjusted for Inflation

THE MAILBOX NEWS COMPUTES "REALTIME" GROSS DOMESTIC PRODUCT IN TERMS OF THE INFLATION-REDUCED POWER OF MONEY

EXAMPLES:

Country X says its gross domestic product (GDP) is presently growing at a rate of 9.5% compared to a year ago.

Therefore 100 money units in that country in 2004 have grown to 109.50 in 2005.

X says its present annual rate of inflation is 3.9%. This means that its 100 units are now worth 96.1 compared to a year ago. (100 - 3.9 = 96.1)

Multiply 109.50 by .961 and you get 105.0

Therefore X's "realtime rate of growth" is 105 - 100 or 5%.

Country Y says its GDP is growing at an annual rate of 5.2%.

Therefore 100 units of its money are now worth 105.20.

Y says its present annual rate of inflation is 8.5%. This means that each unit is worth .915.

105.20 multiplied by .915 = 96.26.

Therefore Russia's "realtime rate of growth" is 96.3 - 100 or -3.7%.

Country Z says that its GDP is increasing at an annual rate of 0.5%.

Therefore 100 money units a year ago have grown to 100.5.

Z says its present annual rate of inflation is -0.5%. This means that a unit is worth 1.005.

100.5 multiplied by 1.005 = 100.25.

Therefore Z's "realtime rate of growth" is 0.25%.

African nations GDP and Inflation Data:

Computed by nationmaster.com, these are a weighted average of 2002 data (GDP inflation).

Gross Domestic Product is a good measure of the economic well-being of a country.

The so-called "Real GDP" popular with economists is computed by dividing GDP by inflation. But this artificially increases the GDP number. (More on Real GDP)