While GDP is a broad measure of a country’s economic performance, it falls way short as a comprehensive measure of the economic health of a nation in more ways than one.
It is the highlight of every National Day Message from the Prime Minister[1]. No National Day Rally speech gets delivered without its mention. Economic statistics dished out by the government never fail to mention it. It is used as the main measure of how well our nation is doing economically. Indeed, it is such an important statistic that the bonuses of all the Cabinet ministers and 60,000 civil servants are pegged to it.
I am talking, of course, about Singapore’s Gross Domestic Product (GDP).
The GDP is the market value of all final goods and services produced in a country in a year. Specifically, it is the sum of consumption, investment, government spending and exports, minus imports, in one year. Economists usually talk about GDP in terms of its year-on-year growth, measured as a percentage increase (or decrease) from the previous year. Also frequently quoted is the GDP per capita, which is the GDP divided by the total number of residents in the country.
GDP a poor measure of performance
While GDP is a broad measure of a country’s economic performance, it falls way short as a comprehensive measure of the economic health of a nation in more ways than one.
Continue reading “Measuring economic performance: Looking beyond GDP”