Economics

GDP is a strong measure of health of the economy, and it’s among the most important and
widely reported economic data
Gross Domestic Product (GDP) is the economic measure of the growth created in an
economy through production activities over a period of time. Nominal GDP is GDP represented
in consideration of the current market prices. The essence of this is to avoid misrepresentation
that is as a result of inflation. Inflation causes fluctuations in the prices of goods and services,
and such volatility needs to be factored into the GDP to show the accurate growth rate of an
economy.
An article by The World Bank Group highlights the effects of COVID-19 on the global
GDP. Global GDP was affected by lack of utilization of factors of production, labour and capital
(The World Bank 2020). The lockdowns and travel restrictions forced people to stay home,
causing labour underutilization. There was also a lack of capital movement due to the shocks
created in the financial markets, investor confidence dropped (The World Bank 2020). The
article suggests that the GDP was further affected by an extension of containment and restriction
measures. All these factors compounded the global GDP falling 4 points below the international
benchmark (The World Bank 2020). The article also suggests that developing countries will feel
the impact of the slow growth in GDP than developed countries.
The World Bank. (2020, April). The Potential Impact of COVID-19 on GDP and Trade : A
Preliminary Assessment. Open Knowledge Repository. Retrieved December 2021, from
https://openknowledge.worldbank.org/handle/10986/33605