According to the Nikkei Asian Review, preliminary GDP figures for 2023 released by the Japanese Cabinet Office show that Japan’s nominal GDP growth was recorded at 5.7%, while China’s was 4.6%.
What is nominal GDP?
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Nominal Gross Domestic Product (GDP) reflects the total value of goods and services produced within a country at current prices. It uses the prices of the period in which the products were produced.
Nominal GDP is an indicator that clearly reflects price changes due to inflation and the rate of price increase in the country’s economy. In cases where all prices tend to rise or fall together, nominal GDP will be higher.
On February 15, the Government of Japan announced the nominal GDP figures for 2023 for the country, which are calculated in USD and amount to 4.2 trillion USD, while Germany’s figure is 4.5 trillion USD. As a result, Germany has surpassed Japan to become the world’s third-largest economy, after the United States and China.
What is real GDP?
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Real Gross Domestic Product (GDP) reflects the total value of goods and services produced within a country, with the final output calculated in base-year prices, also known as GDP at constant prices. Additionally, it is an indicator that adjusts domestic total products and services based on the inflation rate.
The difference between nominal GDP and real GDP lies in the inflation factor. Nominal GDP is calculated at current prices and does not include inflation adjustments. On the other hand, real GDP must be adjusted for inflation.
In the case of positive inflation, real GDP will be lower than nominal GDP because real GDP is equal to the ratio of nominal GDP to the GDP deflator.
Is Vietnam’s GDP growth of 5.05% in 2023 real or nominal?
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In terms of GDP growth rate, the fourth quarter of 2023 is estimated to increase by 6.72% compared to the same period of the previous year, higher than the fourth quarters of 2012-2013 and 2020-2022. In 2023, the estimated growth rate is 5.05% compared to the previous year, only higher than the growth rates of 2.87% and 2.55% in 2020 and 2021, respectively, in the period of 2011-2023.
Therefore, the GDP growth rate in 2023 is real GDP growth.
In addition, the scale of GDP at current prices in 2023 is projected to exceed 10.2 million trillion VND, equivalent to 430 billion USD. Real GDP (at 2010 constant prices) is at 5.8 million trillion VND.
