Bangladesh GDP to Grow at 6.8% this Fiscal

[BDforever]

Economics 101: The GDP list which is published by the IMF is that of Nominal GDP or GDP at current prices, that means cost of all the production within a country in current prices of present year, it has nothing to do with what BASE year you select (you can make it 2050 if you want), so as per IMF, the current nominal GDP of BD is $118 billion.

The thing you are talking about is GDP at Constant prices.



OECD Glossary of Statistical Terms - Gross domestic product (GDP) – current prices Definition

you need to know there is a connection between GDP and base year.

GDP, or Gross Domestic Product is the value of all the goods and services produced in a country. The Nominal Gross Domestic Product measures the value of all the goods and services produced expressed in current prices. On the other hand, Real Gross Domestic Product measures the value of all the goods and services produced expressed in the prices of some base year. An example:

Suppose in the year 2000, the economy of a country produced $100 billion worth of goods and services based on year 2000 prices. Since we're using 2000 as a basis year, the nominal and real GDP are the same. In the year 2001, the economy produced $110B worth of goods and services based on year 2001 prices. Those same goods and services are instead valued at $105B if year 2000 prices are used. Then:

Year 2000 Nominal GDP = $100B, Real GDP = $100B
Year 2001 Nominal GDP = $110B, Real GDP = $105B
Nominal GDP Growth Rate = 10%
Real GDP Growth Rate = 5%

Once again, if inflation is positive, then the Nominal GDP and Nominal GDP Growth Rate will be less than their nominal counterparts. The difference between Nominal GDP and Real GDP is used to measure inflation in a statistic called The GDP Deflator.

Special note: The base year is very important in three respects. Firstly, the GDP estimates will be expressed in constant prices for the base year. Second, the index number applies, so that a sector that was very economically important in the base year will continue to appear very important despite structural changes that may have occurred since the last base year.

Conversely, sectors that were unimportant or not even existing will barely have an impact on the official statistics. Finally, the data sources and the use of proxies are set in the base year. Even when new information is becoming available, national accountants may be unwilling or unable to add this data to the GDP series. Thus, when the base year is out of date, the GDP series becomes an increasingly unreliable guide to interpreting real economic change. The IMF statistical division recommends a change of base year every fifth year.

Important question: Which is a better measure of economic well-being real GDP or Nominal GDP?

Answer:

Well real GDP takes into account the inflation rate and thus is more accurate at recording the actual increase in production activities. Therefore Real GDP is better.
Real GDP better measure of economic well-being.Because Real GDP is not affected by changes in prices, changes in real GDP reflects only changes in the amount being produced.

 

[UKBengali]

^^^ Ignore the poster who loves mocking BD at every opportunity.

It must pain him and his ilk to see that the BD economy is now doing so well.

In the future, maybe 10 years from now, the wealth can then be used to build a strong military.

 

[arp2041]

you need to know there is a connection between GDP and base year.

GDP, or Gross Domestic Product is the value of all the goods and services produced in a country. The Nominal Gross Domestic Product measures the value of all the goods and services produced expressed in current prices. On the other hand, Real Gross Domestic Product measures the value of all the goods and services produced expressed in the prices of some base year. An example:

Suppose in the year 2000, the economy of a country produced $100 billion worth of goods and services based on year 2000 prices. Since we're using 2000 as a basis year, the nominal and real GDP are the same. In the year 2001, the economy produced $110B worth of goods and services based on year 2001 prices. Those same goods and services are instead valued at $105B if year 2000 prices are used. Then:

Year 2000 Nominal GDP = $100B, Real GDP = $100B
Year 2001 Nominal GDP = $110B, Real GDP = $105B
Nominal GDP Growth Rate = 10%
Real GDP Growth Rate = 5%

Once again, if inflation is positive, then the Nominal GDP and Nominal GDP Growth Rate will be less than their nominal counterparts. The difference between Nominal GDP and Real GDP is used to measure inflation in a statistic called The GDP Deflator.

Sir, Firstly the thing which you are calling Real Growth rate is not Real growth rate but GDP at Constant/base prices.

Real Growth rate = Total GDP - Inflation - Currency Fluctuations.

Secondly, I guess you are saying roughly the same thing as to what I am saying, i.e. The GDP at BASE price is LESS than GDP at CURRENT PRICES.

So, what i am trying to say, is that there is no magic wand where a countries GDP is increased suddenly once the base year is changed.

IMF doesn't give it's list in Base year as it doesn't makes sense since different countries have different base years, so to make it a level playing field they give the list in CURRENT PRICES.

@Chinese-Dragon

 

[qinglong-china]

Congratulation! Sincerely hope Bangladesh to achieve greater success

 

[BDforever]

Sir, Firstly the thing which you are calling Real Growth rate is not Real growth rate but GDP at Constant/base prices.

Real Growth rate = Total GDP - Inflation - Currency Fluctuations.

Secondly, I guess you are saying roughly the same thing as to what I am saying, i.e. The GDP at BASE price is LESS than GDP at CURRENT PRICES.

So, what i am trying to say, is that there is no magic wand where a countries GDP is increased suddenly once the base year is changed.

IMF doesn't give it's list in Base year as it doesn't makes sense since different countries have different base years, so to make it a level playing field they give the list in CURRENT PRICES.

@Chinese-Dragon

read my total post

 

[arp2041]

read my total post

I am not here to discuss as to which one is better of the two.

Just answer my query, will BD GDP in 2005 prices be more or less than GDP at current prices which is $118 billion (IMF DATA)??

 

[BDforever]

I am not here to discuss as to which one is better of the two.

Just answer my query, will BD GDP in 2005 prices be more or less than GDP at current prices which is $118 billion (IMF DATA)??

i think you did get it, it is not about nominal GDP , it is about real GDP. Different GDP tools used for different purposes.

 

[arp2041]

i think you did get it, it is not about nominal GDP , it is about real GDP. Different GDP tools used for different purposes.

Sir, there is another GDP tool called GDP PPP, which measures the Purchasing power of a citizen in there respective country in there respective currency terms, in PPP terms Indian economy is thrice of nominal terms, but in India no one pays any heed to it since it is not a STANDARDIZED scale to compare fairly with other nations.

It is GDP in nominal terms which every nation takes seriously & IMF brings out it's nominal GDP list for each nation each year.

Anyways, i think you are tacitly agreeing with me over this point.

 

[BDforever]

Sir, there is another GDP tool called GDP PPP, which measures the Purchasing power of a citizen in there respective country in there respective currency terms, in PPP terms Indian economy is thrice of nominal terms, but in India no one pays any heed to it since it is not a STANDARDIZED scale to compare fairly with other nations.

It is GDP in nominal terms which every nation takes seriously & IMF brings out it's nominal GDP list for each nation each year.

Anyways, i think you are tacitly agreeing with me over this point.

1.bro you are wrong , Countries consider all types of GDP tools, not just one. IMF uses Nominal GDP tools because it measures GDP in terms of current price. on the other hand Real GDP focuses on production level (price level fixed)
2. no one was talking about nominal GDP except you.
3. PPP is just a relative measurement to compare between two countries.

 

[arp2041]

1.bro you are wrong , Countries consider all types of GDP tools, not just one. IMF uses Nominal GDP tools because it measures GDP in terms of current price. on the other hand Real GDP focuses on production level (price level fixed)
2. no one was talking about nominal GDP except you.
3. PPP is just a relative measurement to compare between two countries.

Fair Enough, Just answer my query (repeating again) & I am out of here:

A BD member posted that when the base year will be changed to 2005, BD GDP will increase to $135 billion (GDP at current prices of BD is $118 billion).

So my question is, at 2005 prices, BD's GDP will be more or less than the nominal/current prices???

Just a simple query.

 

[BDforever]

Fair Enough, Just answer my query (repeating again) & I am out of here:

A BD member posted that when the base year will be changed to 2005, BD GDP will increase to $135 billion (GDP at current prices of BD is $118 billion).

So my question is, at 2005 prices, BD's GDP will be more or less than the nominal/current prices???

Just a simple query.

Read his post again, he never mentioned Nominal GDP. You brought Nominal GDP issue

 

[Mani2020]

@arp2041

Nominal GDP is GDP evaluated at current market prices. Therefore nominal GDP will include all of the changes in market prices that have occurred during the current year due to inflation or deflation. for nominal GDP you dont need a base year

Nominal gdp is simply a sum of price x quantity of goods in an economy

Nominal GDP = ∑ ptqt

base year is needed for the calculation of real gdp

real gdp is calculated as Real GDP = (Nominal GDP/GDP deflator) times 100

where gdp deflator is [(value of basket for that particular year)/( value of basket base year)]*100

if the value for base year will be lower it means higher gdp deflator and higher gdp deflator means low real gdp

 

[scholseys]

awami league cooked statistics, just like greece and cyrprus.

 

[UKBengali]

Can anyone explain if it is possible to "cook" BD GDP statistics, if so how is this possible and are there any previous precedence?

If this is possible, then this is quiet worrying.

 

[eastwatch]

Sir, Firstly the thing which you are calling Real Growth rate is not Real growth rate but GDP at Constant/base prices.

1) Real Growth rate = Total GDP - Inflation - Currency Fluctuations.

Secondly, I guess you are saying roughly the same thing as to what I am saying, i.e. The GDP at BASE price is LESS than GDP at CURRENT PRICES.

2) So, what i am trying to say, is that there is no magic wand where a countries GDP is increased suddenly once the base year is changed.

1) You are quitecorrct about the equation here.

2) Certinly, there is no magic wand to increase the GDP only by moving up the base year. But, in case of BD the base year is 1995, and the govt will bring up the base year to 2005. In 1995, many of the items produced today were absent, but have been added to the economy after the 1995 base year. So, when the statisticians add all the values of production of goods and services of these items in the 2005 base year, the GDP value will certainly rise.

The additions will raise the GDP by at least 15%, this is what the finance ministry people are saying. There is already a thread about this effect on base year change. The nearer the base year is, the more correct the GDP statistics are. For example, Indian base year is 2010 which gives a higher and more accurate GDP figure.