Real GDP Per Capita

Definition

Real GDP per Capita measures the average level of national income (adjusted for inflation) per person. It gives a rough indication of average living standards.

• GDP, (Gross Domestic Product) measures the national output/national income of an economy; this is a measure of the volume of goods and services produced in a given year.
• Real GDP takes into account inflation. In other words, Real GDP measures the actual increase in goods and services and excludes the impact of rising prices.
• Real GDP per capita takes into account the average GDP per person in the economy.

Example of real GDP per capita

Between 2000 and 2001

• Nominal GDP has increased 7%.
• With inflation of 2%, real GDP has increased 7-2 = 5%
• With population growth of 1%, real GDP per capita has increased by 4%

See also:

Calculating Real GDP

This gives different answer.

Importance of GDP per capita

• This shows the difference between real GDP and real GDP per capita in the UK between 2005 and 2015.
• Due to population growth, the increase in per capita GDP is significantly less than standard real GDP.
• Therefore, although real GDP increased, average incomes didn’t. See: economic growth per capita

Comparisons of GDP per capita around the world

This is a measure of real GDP per capita using purchasing power parity (it takes into account local cost of living). Even with PPP, there is a big difference between rich countries like Norway and poor countries like Ghana.

Real GDP per capita as a map

Related

• GDP Per Capita Statistics
• Richest Countries by GDP
• Measuring Living Standards – limitations of GDP
• Does GDP measure economic development?
• Misleading economic statistics
• GDP per capita statistics