We hear the acronym GDP being thrown around by finance experts, news reporters and the Reserve Bank (aka the Big Bank!) - but what does it actually mean?

Gross Domestic Product (GDP) is the total market value of all goods (aka physical things you find in shops) and services (aka things like haircuts, maintenance and customer service) produced within Australia in a given period of time. 

The Australian Bureau of Statistics (aka ABS) generally releases Australia’s GDP figures once a quarter.

What GDP means

GDP is used as a measure of the size of our economy. For example, if Australia’s GDP is $1 trillion, then our economy is valued at $1 trillion. 

But rather than look at the total value of a country’s GDP, it’s normally the percentage change in GDP that people talk about. If the percentage change is 1%, that means Australia’s economy has grown by 1%.

If the percentage change is -0.5%, that means Australia’s economy has shrunk by 0.5%. 

Generally, economists want the economy to be growing at around 2% per year. 

What do GDP and recessions have in common?

The technical definition of a ‘recession’ is if the economy has shrunk for two or more quarters (3-month-periods) in a row. In other words, if we see a negative percentage change in GDP twice in a row, then we’re technically in a recession. Yikes.

Last year, Australia entered its first recession in nearly 30 years, because GDP shrunk 0.3% over the March quarter, and 7% over the June quarter. 

And that was thanks to a lil thing we like to call a global pandemic.

What is the GDP of Australia

Australia's GDP increased 0.7% over the three months to June 2021.