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
‘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. ;–)