SEVERAL FACES TO THE SAME COIN

There are several ways to looking at GDP that correspond to different ways to estimating its size. One is to look at it as a total output of goods and services. This means the total ‘value added’ or what each of the producers add to their inputs. This is the output measure of GDP. On this measure GDP splits into three broad categories: industrial, construction and services value added.

Another way to estimate GDP is to look at the expenditure on total output (excluding spending by residents on imports and including spending by foreigners on exports). This is the expenditure measure of GDP. On this approach, GDP breaks down into consumer spending, government spending, investment, inventories, and net trade (that is, exports minus imports).

A third way to estimate GDP is to aggregate all institutional sectors income (households, companies, government, external sector). Ultimately these three different measures genuinely converge as statisticians accumulate in-depth information on the domestic economy and the balance of payments.