GDP Growth Rate
The percentage change in real gross domestic product from one period to the corresponding earlier one.
Formula
GDP Growth = (Current Period Real GDP - Prior Period Real GDP) / Prior Period Real GDP x 100
Unit
%
In depth
India reports growth year on year, comparing a quarter with the same quarter a year earlier, while most advanced economies report a seasonally adjusted annualised rate against the previous quarter — the two are not comparable and are frequently confused in commentary. Year-on-year figures are heavily affected by the base: a weak quarter a year ago produces a flattering number now, which is the base effect. Growth is also revised substantially between releases. The relationship between GDP growth and equity returns is much weaker than intuition suggests, because markets price expectations rather than outcomes.
Worked example
A quarter showing 8.2% growth against a quarter that had contracted 3% a year earlier is measuring recovery from a low base. Against the level two years prior, the compound rate might be under 3%.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “GDP Growth Rate” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.