Can someone please explain what factors affect a country GDP? Also, if Thailand has a GDP of 4.5% and Australia has a GDP of 2.8%, please explain which country has a better economy.

Question

Thanks for your help

Answer 1

Those are not GDP's (Gross Domestic Products), they are GDP growth rates. A higher growth rate is better in the long run, but different short term factors may be at play. The overall level of the GDP, per capita, is a better measure of economic health.

China has had the largest GDP growth rate in the world for over a decade but may not be able to sustain it. Thailand and Australia both have good economies, but Australia's has been historically more stable.

As for your first question, I suggest you review the meaning of GDP. It is the sum of the value of all goods and services produced by the country.

Answer 2

Usually, GDP is measured by the expenditure method:

GDP = consumption + investment + (government spending) + (exports − imports)

Many factors affect each of these. If government spends too much, then taxes go up and people have less to spend. If people buy imports more than other countries' people buy ours, then we owe more than we get. If there is a bad weather year, all of these factors may have difficulties. War is a big factor.