Gross Domestic Product, or GDP

Gross Domestic Product, or GDP, measures the value of goods and services of a country during a set time frame, such as every quarter. GDP shows how a country’s economy is tracking - whether it’s slowing or growing. Policymakers, investors, and businesses use GDP to understand a country’s economic health and growth or decline, and make decisions based on it. GDP can be calculated in several ways:

• Production approach: The combined value of all the goods and services produced by a country
• Expenditure approach: How consumers, businesses and the government are spending and investing, and includes net exports (the difference between exports and imports) and shows a country’s economic size and growth
• Income approach: Adds up the income earned by households, businesses and the government’s tax revenue

Aotearoa NZ uses the production and expenditure approaches to determine GDP. Read about how GDP is used to declare a recession.