Choose a solve mode for real or nominal GDP, GDP deflator, cumulative price change from the reference year, growth between periods, or per-capita GDP. A single annual inflation rate generally cannot deflate a GDP level to reference-year dollars.
Real GDP Formula
The following formula is used to calculate real gross domestic product using the GDP deflator (an index with a base year typically set to 100).
- Where RGDP is real gross domestic product (real GDP)
- NGDP is nominal gross domestic product (nominal GDP)
- GDPD is the GDP deflator index (base year = 100)
To calculate real GDP using the GDP deflator, divide nominal GDP by (GDP deflator / 100) (equivalently, multiply nominal GDP by 100 and divide by the GDP deflator).
Real GDP Definition
Real GDP (real gross domestic product) is a measure of a country’s economic output that has been adjusted for changes in domestic price levels, allowing output to be compared across time in constant (inflation-adjusted) terms.
How to calculate real GDP?
How to calculate real GDP
- First, determine the nominal GDP
Using an online database that tracks gross domestic product, determine the nominal GDP for the country being analyzed.
- Next, determine the GDP deflator
Find the GDP deflator (a price index, often with a base year of 100) for the same country and time period.
- Calculate the real GDP
Enter the information from steps 1 and 2 into the formula or calculator above.
FAQ
Real GDP is gross domestic product adjusted for changes in domestic price levels (inflation/deflation), typically using a price index such as the GDP deflator, so output can be compared over time in constant dollars.
Deflation is a general decrease in the prices of goods and services over time (negative inflation), which increases the purchasing power of money.
