A country’s gross domestic product (GDP) is a measure of the size of its economy and a means of validating its production ability. When news of the GDP is positive, confidence in a country is strengthened. Business entities are interested in investing in the region, capital and resources are injected, goods and service production rates are increased, and the economic cycle takes an upturn, bringing higher employment rates and, ultimately, a healthy market of exchange is reinforced. When news is negative, the ramifications are a domino-like affect. Capital becomes scarce as investors look for better opportunities, resources are diverted, unemployment climbs, and inflation is more likely a factor. An environment of uncertainty can put a stranglehold on a country’s ability to turn out products and services, ultimately leading to a drop in its GDP and a loss of value in its worth.

When an isolated GDP falls within a region, it is often absorbable; the world’s economy can generally supplement itself. When the global GDP is threatened by several of the world’s largest economies being in jeopardy, the outcome can be disastrous. The current economic and banking crisis, initiated in the U.S. and now enlarged to global regions is threatening the GDP of major economic countries.

The subject of a shrinking global GDP is on the minds of most economic ministers and major country officials, and their thoughts are of an unsettling nature.

Rank	Country	GDP (millions of USD)
-	World	54,311,608
1	United States	13,843,825
2	Japan	4,383,762
3	Germany	3,322,147
4	China (PRC)	3,250,827
5	United Kingdom	2,772,570
6	France	2,560,255
7	Italy	2,104,666
8	Spain	1,438,959
9	Canada	1,432,140
10	Brazil	1,313,590
11	Russia	1,289,582
12	India	1,098,945
13	South Korea	957,053
14	Australia	908,826
15	Mexico	893,365
16	Netherlands	768,704
17	Turkey	663,419
18	Sweden	455,319
19	Belgium	453,636
20	Indonesia	432,944
21	Switzerland	423,938
22	Poland	420,284
23	Norway	391,498
24	Republic of China (Taiwan)	383,307
25	Saudi Arabia	376,029
26	Austria	373,943
27	Greece	314,615
28	Denmark	311,905
29	Iran	294,089
30	South Africa	282,630

The GDP

Widely referenced when measuring the economic temperature of a country is The Gross Domestic Product (GDP). The GDP is explained in many ways and forms– often as the total market value of all finished goods and services produced within the country during a measured period of time, with an assigned monetary value. The GDP is calculated for a calendar year period, and, in the U.S., reported on the last day of each calendar year quarter. In some instances, when output of products and services are measured in an intermediate stage, the GDP is measured by the sum of a value added at every stage of production for all final goods and services produced.

Another way of looking at the GDP is that it includes the total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, less the value of imports.

Growth in GDP is what contributes to an expansion of an economy. It fuels confidence. When indicators are in decline, it can be the basis for a host of economic maneuvers by a country’s empowered economic team as it is the nucleus for uncertainty and turmoil in the stock markets.

In the U.S., frequently an advanced or preliminary GDP is released– and subsequently revised– before a final report is issued. While the GDP report indicators can cause the markets to react significantly, the subsequent revisions can cause even more fluctuations and reactions by investors. The manor in which GDP indicators are presented is somewhat complicated. When reported in current dollar form, the GDP is calculated using today’s current-dollars and comparisons are referenced between time periods, with inflation factors incorporated. When reported in constant-dollar form, the GDP factors are converted using the current information into a standard reference, such as dollars from a different calendar year period, as in “1999 Dollars”. Since the constant-dollar form factors out the results of inflation, it allows easy comparisons between periods.

Noteworthy is the difference of the GDP and GNP, another widely reported economic indicator. GDP, the more expansive of the two, includes goods and services produced within the geographic boundaries of the U.S., regardless of the producer’s national entity. GDP is concerned with the region in which income is generated. It focuses on where the output is produced rather than who produced it.

GNP does not include goods and services produced by foreign country producers, but does include goods and services produced by U.S. firms operating in foreign countries. Put another way, GNP adds net foreign investment income compared to GDP.