The GDP of any country is the key indicator for its growth. The real gross domestic product is the market value of all the goods and services produced in a country during a specific time period. GDP is one of the primary indicators to gauge the heath of country’s economy. It can be determined in three ways-production approach, income approach and expenditure approach. Usually, GDP is expressed as a comparison to the previous quarter or year. It is most often presented on an annualized percent basis. Also, the individual data sets are adjusted for price changes and are therefore net of inflation. In recent times, Globalization and economic integration have played a vital role while considering GDP statistics.
GDP growth rate is majorly dependent on technology (total factor productivity), capital infusion and labour inputs (population). For developed countries, the capital infusion has already been in place. The population is stagnant. Hence, the improvement in technology and innovation turns out to be the major contributor. For developing countries such as India and China, the growth rate can be improved by increasing the capital infusion and thereby, productivity.
The GDP contribution of US to world’s GDP would be surpassed by the contribution from India and China, and the key fundamentals support this inference. In addition, U.S. is expected to grow at 2.4 percent, on average per year, and the Euro Zone at 1.2 percent from 2014-2019. While the Eurozone is expected to maintain the same growth rate during 2020-2025, the U.S. is expected to see a decline in its long-term growth to 1.7 percent.
The three biggest emerging economies will account for around 30.0% of global GDP in PPP terms in 2020 compared to 23.5% in 2012 when there were just two emerging markets amongst the five largest economies (1. USA 2. China 3. India 4. Japan 5. Germany). The most discernible shift in global power towards emerging market economies is expected to take place in 2017 when China would become the world’s largest economy. Therefore, the projections are in favour of Asian giants where India and China are set to lead the world’s GDP contribution and play a major role in economic turnaround in future.
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