GDP is a measure of the value of all final goods and services produced in a country. It is a key indicator of economic performance and an important source of information about the well-being of a nation. GDP reflects the amount of value added by all sectors of the economy—private consumption, investment, and government spending. GDP includes all expenditures on finished goods and services (exports minus imports). The Purchasing Power Parity (PPP) methodology used by the IMF to calculate global GDP allows for the comparison of economies of different price levels.
The growth of a country’s GDP is generally regarded as a proxy for the standard of living of its citizens. It is also an important metric when assessing the effectiveness of policies and for identifying potential risks to growth, such as inflation or recession.
Global GDP growth is projected to slow this year reflecting higher trade barriers and persistently elevated policy uncertainty. However, a rebound in global demand and lower commodity prices should support growth in 2025–2026. Growth in low-income countries is expected to remain sluggish this year due to ongoing conflict and reduced donor support.
GDP omits the value of informal and unrecorded economic activity, such as under-the-table activities or black market activity. It also does not fully account for quality improvements or the introduction of new products. As a result, it may understate true economic output. From a national perspective, changes in a country’s relative contribution to world GDP can signal its growing importance in the global economy as well as provide an indication of how its external context is providing economic opportunities and challenges.
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