Concepts of GDP and GDP Growth Rate - Example

GDP Growth Rate for State of Qatar – 2000 to 2013 Paper 1 1. The following is a table indicating the percentage rate of growth of the GDP for Qatar: 2000 to 2013. Year GDP growth rate (% annually) 2000 Not available 2001 3.3 2002 7.1 2003 3.5 2004 19.2 2005 7.5 2006 26.2 2007 18.0 2008 17.7 2009 12.0 2010 16.7 2011 14.8 2012 2.6 2013 5.6 Source: World Bank (2014). 2. The following is a graph indicating the percentage rate of growth of the GDP for Qatar: 2000 to 2013. From the information provided in the table and graph above, there are several things that can be concluded about the rate of GDP growth for Qatar between 2000 and 2013. First, it can be seen that in general, the rate of GDP growth for the country has been fluctuating over the years. It can be seen that the economy of the country has been undergoing short periods of growth and decline which have been alternating all through the years. It is noted that periods of sharp growth in the economy as indicated in a sudden rise in the rate of growth of the GDP have been witnessed in the following periods: 2002-2003, 2003-2004, 2005-2006, 2009-2010 and 2012-2013. Although the periods of growth have inevitably been followed by those of decline in the rate of growth of the GDP of the country, data for two periods (2004-2005 and 2010-2012) indicate sharp declines in the rate of growth. Whereas the rate of growth of GDP fell from 19.2% in 2004 to 7.5% in 2005, the decline in the rate of growth in the second one was from 16.7% in 2010 to 2.6% in 2012. The second thing about the rate of growth of GDP for Qatar that is evident in the table and graph above is that in general, the country has been undergoing a period of rapid growth over the years. According to the figures released by the Qatar National Bank (2013, p. 1), the country has had a compounded rate of growth of GDP of 12.0% between 2008 and 2012. From the figures indicated in the table and graph above, it can be seen that the country has witnessed a high rate of economic growth as indicated in the percentage rate change of GDP from 2001 up to 2013. References Qatar National Bank (2014). Qatar economic insight 2013. Retrieved from http://www.qnb.com.qa/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1355496376563&ssbinary=true World Bank. (2014). Data: GDP growth (% annual). Retrieved from http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG Paper 2 Introduction In this paper, two important things are examined. First, comprehensive definitions of the concepts of GDP and GDP growth rate are presented. The definitions cover the components of the concepts and how the concepts can be calculated. Second, the paper contains information about the economic situation in Qatar. Detailed information regarding the past, present and future trends of the economy is presented. What is GDP? Simply put, GDP (which in full is the gross domestic product) refers to the final economic value in the market of all the final goods and services that have been produced within a country for a specific period of time (Slavin, 2008, p. 189). Since the measure seeks to indicate the final measure of expenditure on goods and services within an economy for a specified period of time, its measurement takes into consideration several specific components as follows: the total consumption, investment, expenditure by the government and the total net exports of the country of the period in question. This is represented in the following equation which is an identity, Y = C + I + G + NX, where Y is the GDP value, C is total consumption, I is the total investment, G is government expenditure and NX is the total net exports. What is growth rate? The growth rate is a special measure that is used to indicate changes in the real GDP of a country over time. Since GDP measures tend to fluctuate with every passing year, it is important for the percentage change in the GDP to be determined for every year. Such percentage changes are used to indicate the overall rate of growth of the economy of a country over time. By dividing the nominal GDP with the GDP deflator, the real GDP of a country for a particular year is found. Changes in the real GDP for two subsequent years are used to calculate the growth rate of the country. The economic situation of Qatar The changes in the rate of GDP growth for Qatar indicate that the country has had a volatile GDP growth rate. The economy has been experiencing expansions and contractions in the GDP. See the figure below. The reason for the fluctuations in the GDP growth rate of Qatar is that the country’s economic drivers are crude oil, petrochemicals, liquefied natural gas and related items. The prices of these commodities are very volatile and therefore cause the GDP to expand and shrink depending on their price levels in any year (US Geological Survey, 2012, p. 53). The economic situation of Qatar can also be understood in terms of several important aspects that have defined the trends that have been witnessed in the economy over the course of time. To begin with, it is important to point out that the country has been experiencing a high rate of growth over time. One major contributor to the high rate of economic growth that has been experienced in the country has been a declining rate of inflation. According to the UN (2010, p. 134), the consumer price index for Qatar has been declining since the second half of 2008. Although this was the trend in the world after 2008, is observed that Qatar experienced a sharp decline in consumer price index over the time as a result of low prices of commodities and the housing market. However, as much as inflation has been rising ever 2008, it has largely remained under control over time (Qatar National Bank, 2013, p. 1). This state of affairs has been an important characteristic of the economic status of Qatar. The second issue that defines the past, current and future status of the economy of Qatar is the contribution that is made by different sectors of the economy to the overall growth of the economy of the country. According to the figures published by the Qatar National Bank (2013, p. 3), the high rate of growth of the Qatar economy over the recent past has been a result of the contribution of different sectors of the economy, the leading one being gas and oil which contributed 42.2% of the GDP of the country back in 2012. Other sectors such as financial services, government services, trade and hotels and logistics have been making significant contributions to the economic growth of the country in the recent past. The third issue arises from possible economic trends that are likely to influence the GDP of Qatar. Generally, many countries in the gulf region are implementing specific economic diversification programs that are meant to reduce the dependence on oil and gas, which has been a key characteristic of these economies (Hvdit, 2013, p. 2). Qatar, being one of the countries in the region, is also implementing the strategies. However, with the current forecasted GDP growth of 6.8% for 2014 (Qatar National Bank, 2013, p. 21), the country is likely to continue experiencing a high rate of economic growth. Summary In this paper, the definitions of GDP and rate of growth of GDP have been presented. Also, it has been pointed out that Qatar is likely to experience a sustained rate of economic growth over the future as a result of diversification processes that seek to reduce the level of dependence on oil and gas as well as a controlled level of consumer price index. Further, it has been pointed out that the changes in the percentage rate of economic growth in the country can be attributed to changes in several economic measures over the course of time. References Hvdit, M. (2013). Economic diversification in GCC countries: Past records and future trends. Kuwait program on development, governance and globalization in the Gulf States, London School of Economics. Retrieved from http://www.lse.ac.uk/middleEastCentre/kuwait/documents/Economic-diversification-in-the-GCC-countries.pdf Qatar National Bank (2014). Qatar economic insight 2013. Retrieved from http://www.qnb.com.qa/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1355496376563&ssbinary=true Slavin, S.L. (2008). Macroeconomics. New York: Granite Hill. UN. (2010). World economic situation and prospects 2010. Geneva: United Nations Publications. US Geological Survey (2012). Minerals Yearbook: Area Reports International Review 2010 Africa and the Middle East. Washington. Government Printing Office. Read More