Understanding GDP Slump – Part 1 of 3 | Summachar

The recent COVID pandemic has had a disastrous effect on economies across the world.

In April-June quarter of 2020, India’s GDP slumped by -23.9%, a figure that shocked everyone. What does this actually mean? Is a recovery possible? If so, how? Let’s go beyond just a number and dig deeper to get better insights.

To be able to meaningfully discuss any GDP related news, we need to start from the fundamentals and understand the different GDP terminologies. 
Gross Domestic Product is the total value of goods and services produced during a given period, usually a year or a quarter. It is represented in currency value (like ₹, $, RMB, etc).
GDP growth rate, as the name indicates, is the growth of GDP in a given time period compared to a previous time period. It is represented in %age and calculated on annual or quarterly bases.

Quarterly growth is calculated by comparing GDPs of 2 quarters.
Quarter on Quarter or QoQ Growth is the Growth of quarterly GDP compared to previous quarter - it captures seasonal volatility. 

Year on Year Growth or YoY Growth is the Growth of quarterly GDP compared to the same quarter in previous year. It captures seasonal volatility and also shows long-term trends to an extent.
Annual Growth is the Growth of annual GDP compared to previous year. It outlines long-term trends.

In the next part of this series we will look at the impact of COVID19 on GDP across the world.