Economy
Real GDP
Definition
GDP adjusted for inflation, measuring the actual quantity of goods and services produced. Changes in real GDP represent actual growth in economic output.
Explanation
Real GDP removes the effect of price changes, isolating genuine changes in production. If nominal GDP grows 7% but inflation is 4%, real GDP growth is roughly 3%. This makes real GDP essential for tracking actual economic performance over time. Central banks and policymakers focus on real GDP when assessing economic health.