Roy's Blog

On Software and Fish.

OT: Calculating GDP Growth

| Comments

As I work on a new site, I hit a bit of a wall when trying to calculate GDP Growth Rate, given Quarterly GDP figures (in Billions $). I had a very hard time trying to find this through the almighty Google, and a lot of the formulas on the web, are either wrong or simply cover how GDP is calculated, which is not what I needed:

Y = C + I + E + G, where Y = GDP C = Consumer Spending I = Investment made by industry E = Excess of Exports over Imports G = Government Spending

So dusting off some old Economics books, the formula for calculating Annual GDP growth over two periods (usually measured in Quarters) is:

(((x(t)/x(t-1)) ^ (number_of_observations_per_year)) – 1) * 100

Where:

  • ‘x(t)’ is the value of GDP x at time period t.

  • ‘x(t-1)’ is the value of GDP x at time period t-1, or the previous Quarter.

  • ‘^’ means, to the power of.

  • ‘number_of_observations_per_year’ in this case would be 4.

So given values (in Billions $) for Q3 and Q4 2010, we have:

(((13370.10 / 13278.50)^ 4) -1 )* 100 = 2.8%

Now hopefully Google will lead the other 3 people in the world that are looking for this formula here. ;–)

Comments