<p>It depends whether the increase in GDP refers to nominal GDP or real GDP.  Nominal GDP is without any adjustment to exclude the effect of inflation, so an economy is growing only if the rate of increase of nominal GDP exceeds the rate of inflation.  Real GDP, on the other hand, allows for the effect of inflation, so an economy is growing  if the rate of increase of real GDP is positive (exceeds zero).</p>
<p>Given data on rates of increase of GDP or time series of GDP, it is important therefore to be clear whether they relate to nominal or real GDP.  Both concepts are used by economists as explained <a href="https://www.investopedia.com/ask/answers/030515/when-do-economists-use-real-gdp-instead-gdp.asp#:%7E:text=Nominal%20GDP%20is%20the%20total,any%20distorting%20effects%20from%20inflation." rel="nofollow noreferrer">here</a>.</p>

CC BY-SA 4.0
2024-08-15T07:35:38.073Z
Thanks for your answer. Do you know if the numbers that appears in the news are usually nominal or real GDP?
pasaba por aqui
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2024-08-15T09:53:46.097Z
@pasabaporaqui That's difficult to answer as it may vary between countries and/or news outlets, depending for example on whether the source of the numbers (typically a national statistical agency) is genuinely independent of politicians, and on the level of knowledge of journalists.  Where percentage increases relate to a number of years, care is also needed to determine whether the figures are based on total or per capita GDP (in my country, the UK, this has been a contentious point given concerns about immigration adding to population).
Adam Bailey
CC BY-SA 4.0
2024-08-11T20:17:07.153Z
2024-08-11T20:17:07.153Z
Adam Bailey
<p>Assume some country has an increase of GDP (gross domestic product, PIB is spanish) of +3% in some time interval and an increase of CPI (consumer price index, IPC in spanish) of +4% in same interval. Is the economy of this country really growing ?</p>
<p>In other words, economy grows if %GDP &gt; 0 or if %GDP &gt; %CPI ?</p>

<gdp>
Is GDP relative to CPI?
pasaba por aqui
# Is GDP relative to CPI?

(Asked by: username_0 on 2024-08-11)

Assume some country has an increase of GDP (gross domestic product, PIB is spanish) of +3% in some time interval and an increase of CPI (consumer price index, IPC in spanish) of +4% in same interval. Is the economy of this country really growing ?

In other words, economy grows if %GDP > 0 or if %GDP > %CPI ?

**Tags:** gdp


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## 1 answers

### Answer by username_1 on 2024-08-11. Score: 3 | Accepted answer

It depends whether the increase in GDP refers to nominal GDP or real GDP. Nominal GDP is without any adjustment to exclude the effect of inflation, so an economy is growing only if the rate of increase of nominal GDP exceeds the rate of inflation. Real GDP, on the other hand, allows for the effect of inflation, so an economy is growing if the rate of increase of real GDP is positive (exceeds zero).

Given data on rates of increase of GDP or time series of GDP, it is important therefore to be clear whether they relate to nominal or real GDP. Both concepts are used by economists as explained [here](https://www.investopedia.com/ask/answers/030515/when-do-economists-use-real-gdp-instead-gdp.asp#:%7E:text=Nominal%20GDP%20is%20the%20total,any%20distorting%20effects%20from%20inflation.).

> **Comments:**
> **username_0**: Thanks for your answer. Do you know if the numbers that appears in the news are usually nominal or real GDP?  
> **username_1**: @username_0 That's difficult to answer as it may vary between countries and/or news outlets, depending for example on whether the source of the numbers (typically a national statistical agency) is genuinely independent of politicians, and on the level of knowledge of journalists.  Where percentage increases relate to a number of years, care is also needed to determine whether the figures are based on total or per capita GDP (in my country, the UK, this has been a contentious point given concerns about immigration adding to population).  

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