Gross Domestic Product

What does the indicator describe?

The gross domestic product (GDP) is a measure of the economic performance of a national economy over a given period. It indicates the value of the goods and services produced in the economic territory (value added) unless they are used as intermediate consumption for the production of other goods and services. The gross domestic product is calculated at current prices and price-adjusted (deflation with previous year's prices, changing every year, and chain linking). What is shown at previous year's price base is the "real" development of economic activity over time, free from any price influence. The rate of change of the price-adjusted gross domestic product serves as a measure of economic growth in a national economy. Hence, the gross domestic product is the most important aggregate of national accounts and it is one of the indicators of the dissemination standard of the International Monetary Fund (IMF).

How is the indicator calculated?

In Germany, the gross domestic product is calculated applying the production and expenditure approaches.

The production approach means that the gross domestic product is obtained by calculating the value added of all producers as the difference between the value of goods and services produced (output) and intermediate consumption, adding the taxes on products (such as tobacco, mineral oil and value added tax), and subtracting the subsidies on products. The following table shows as an example figures at current prices for Germany for 2005 in EUR billions:

output		4,088.72
-	intermediate consumption	2,082.36
=	gross value added	2,006.36
+	taxes less subsidies on products	218.04
=	gross domestic product	2,224.40

The gross domestic product may also be obtained through the demand side. What is calculated when applying the expenditure approach is the expenditure for the final use of goods and services, i.e. final consumption expenditure of households and government final consumption expenditure, capital formation and the balance of exports and imports (= export surplus = exports minus imports). The magnitude of such figures is shown by following table, giving as an example the figures for 2005 at current prices in EUR billions:

final consumption expenditure of households		1,306.98
+	government final consumption expenditure	417.30
+	gross capital formation (incl. changes in inventories)	384.13
+	exports	919.07
–	imports	803.08
=	gross domestic product	2,224.04

Calculating the gross domestic product by means of the distribution approach is not possible in Germany because basic data on property and entrepreneurial income are lacking. Calculation according to the distribution approach shows the income generated and paid as part of the production activity: compensation of resident employees, property and entrepreneurial income, government taxes on production and imports, government subsidies, consumption of fixed capital, primary income received from or paid to the rest of the world. The following table shows, as an example, the magnitudes for 2005 in EUR billions:

compensation of employees (residents)		1,137.64
+	property and entrepreneurial income	576.05
=	national income (factor costs)	1,713.69
+	government taxes on production and imports less subsidies	207.94
+	consumption of fixed capital	327.96
=	gross national income	2,249.59
–	primary income from the rest of the world (balance)	25.19
=	gross domestic product	2,224.40

In national accounts, the property and entrepreneurial income is obtained as a residual value.

When is the indicator released?

The gross domestic product is calculated for years and quarters. The first annual result in Germany is released as early as mid-January of the subsequent year. The first quarterly gross domestic product figure in Germany is released about 45 days after the end of the reference quarter, i.e. in the mid of February, May, August and November. The detailed results will be released 55 days after the end of the reference quarter. The detailed release calendar is available on the Internet. The quarterly data are consistently linked with the annual results.

How accurate is the indicator?

The early first release of gross domestic product data meets the user need for up-to-date results although frequently the data basis is not yet complete at that point in time. The first provisional figures are revised several times in order to include statistical information that has become available in the meantime; they may deviate from the final results, which are released after about four years. In addition, there are so-called major revisions, aimed, first of all, at introducing new concepts and definitions and incorporating the results of irregular or new surveys or censuses. Comparisons of data for several years show that provisional results fall below or exceed final results approximately by half a percentage point. For some gross domestic product sub-aggregates, the average need for revision is considerably larger.

Further information

More information – in particular, on the methods of national accounting – and on the 2005 revision of national accounts is available on the national accounts website on the internet. The definitions and concepts used are laid down in the "European System of Accounts, ESA 1995", which was published as Annex A to Council Regulation 2223/96 in the Official Journal of the European Communities Nummber L310 of 30 November 1996 and was issued in 1996 as a print version by the Office for Official Publications of the European Communities. A detailed description of practical implementation in Germany can be found in the special volumes p. 22 "Domestic product according to ESA 1995 – methods and fundamentals – revised version after the 2011 revision", p. 23 "Quarterly calculations of domestic product according to ESA 1995 – methods and fundamentals –" and p. 24 "Methods of price and quantity measurement" published as part of subject-matter series 18 "National accounts". These materials can be obtained from the Federal Statistical Office at request or they can be downloaded free of charge from the publication service on the internet.

For further information please contact

Phone: +49 611 75 2626

Fax: + 49 611 75 3952

E-mail: gdp-info@destatis.de

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