Gross Domestic Product (GDP) can be nominal or real. The second is more suitable for comparison between countries and in different periods of time, since it shows the real level of economic development, adjusted for inflation (change in the price level). Both nominal and real GDP are calculated in banknotes (rubles, dollars).
It is necessary
- Rosstat
- https://www.gks.ru/wps/wcm/connect/rosstat/rosstatsite/main/
- IMF
- https://www.imf.org/external/index.htm
- CIA Fact Book
- https://www.cia.gov/library/publications/the-world-factbook/index.html
Instructions
Step 1
Roughly speaking, in order to calculate real GDP, inflation must be “cleared” from the nominal one. When calculating real GDP for the base year, you can take any year, including one located chronologically earlier than the current one. For example, for historical comparison, you can calculate the real GDP of 2000 in 2010 prices, in this case the base year will be 2010.
Step 2
To calculate, you need to know the nominal GDP of the base year. To do this, you can use the research of Rosstat (if you need data only for the Russian Federation), as well as information from the IMF, the World Bank, or the CIA World Book of Facts. To get the real GDP figure, you need to divide the nominal GDP by the general price level (calculated as a price index).
Step 3
Most often, the Consumer Price Index (CPI) is used as price indices for calculating real GDP, which is calculated on the basis of the value of goods included in the market basket of goods (the average number of goods consumed by an average household per year). In developed countries, the consumer basket includes 300-400 items of goods and services. CPI data can also be found on the Rosstat website and on the websites of the statistical services of those countries that interest you.
Step 4
Also, in some cases, when calculating real GDP, the Producer Price Index (PPI) can be used, which is calculated on the basis of data on the cost of intermediate products (a basket of industrial goods) - raw materials and supplies. Its main difference from the CPI is that this index covers only goods (excluding services) and only at the wholesale level of sales.
Step 5
So, to calculate real GDP, nominal GDP must be divided by a price index, among which PPI and CPI are most often used.
