Feature Article Gross domestic product
Gross domestic product (GDP) of Australia is the total market
value of all goods and services produced within Australia in a
given period of time.
GDP does not allow for the depreciation of plant and equipment
which is why the measure is called gross domestic product. Also,
GDP does not differentiate between who produces the goods and
services, i.e. residents or non-residents, this is left to the
gross national income (GNI) measure formely called gross national
product (GNP) which attributes production to residents irrespective
of where the production occurs.
GDP is reported in two ways in current prices, and in real terms
using what are called chain volume measures . In essence, chain
volume measures are constant price estimates. This means that they
measure production volumes by removing that part inflated by price
increases. Chain volume measures are described in greater detail in
the Monthly Economic and Social Indicators (MESI) feature article
entitled Chain volume measures .
Economic
growth
Although the current dollar value of GDP is quoted by
commentators to show the size of the economy it is now running at
$893 billion it is the annual and quarterly changes in real or
chain volume measure GDP that is most often quoted.
The percentage change in real GDP, whether on a quarterly or
annual basis, is called economic growth . Economic growth is
generally considered to be good when it is positive, i.e. the
economy is growing, and bad when it is negative, i.e. the economy
is contracting. Also, to allow for the fact that average living
standard per head of population can only be rising if economic
growth exceeds population growth, economists and commentators
generally want to see economic growth exceed about
2 per cent per annum.
Recession
A contracting economy is defined to be in recession if it
contracts for two or more consecutive quarters.
As Figure 1 shows, there have been four recessions since 1960 in
1961, 1974 75, 1982 83, and 1990 91.
Non-farm gross domestic product
Non-farm GDP is simply GDP with that portion of GDP attributable
to agriculture and services to agriculture excluded. This measure
thus removes the effect of the sometimes large changes in
agricultural output and activity which can occur because of
fluctuations in rural conditions.
To demonstrate these fluctuations, Figure 2 plots chain volume
measure seasonally adjusted farm GDP since the September quarter
1985. It shows clearly the large decline in farm GDP at the time of
the 1994 95 and 2002 03 droughts and the current decline largely
for the same reason.
Although agriculture contributes only about 3 per cent of GDP,
these large effects can tend to obscure underlying changes in GDP
in the rest of the economy. This makes non-farm GDP useful to some
economists, analysts and commentators.
MESI tables 3.1 and 3.2
MESI table 3.1 shows for the past five years:
- quarterly seasonally adjusted, and annual original, current
price GDP
- quarterly seasonally adjusted, and annual original, chain
volume measure GDP and
- quarterly and annual percentage changes.
The annual percentage change in quarterly seasonally adjusted
chain volume measure GDP is graphed over the past twenty quarters
(five years).
MESI table 3.2 shows the same statistics as table 3.1 but with
GDP replaced by non-farm GDP.
MESI e-data tables 3.1 and 3.2
MESI e-data tables show the same statistics as MESI
tables 3.1 and 3.2 but running from the September quarter
1959.
Graphs for tables 3.1 and 3.2 also begin with the September
quarter 1959.
This feature was prepared by Greg Baker and Stephen Barber
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