Economic growth is the amount of production in a country or region over a certain period of time. While financial ministers may keep track of these growth numbers every month, generally it is the quarterly and annual numbers that attract the most attention. In addition to production, measured through the gross domestic product (GDP), local governments and individuals may use a different standard to measure economic growth.
If the GDP of a country one year is $100 billion US Dollars (USD) and the next year is $125 USD billion, then there has been economic growth of 25%. If, on the other hand, the GDP was only $75 USD billion, the growth would be -25%. In most cases, it is still referred to as growth, even if it is a contraction of the economy.
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Most consider economic growth to be one of the surest signs of a country’s overall health. More commerce means more jobs, and more jobs mean more consumption, leading to more production. This can be a very good circle to get into. Like most things, however, this growth tends to come and go in cycles.
If a country has two quarters of lower GDP than the previous quarter, it is said to be in a recession. Recessions tend to come twice a decade historically, and some are more severe than others. Prolonged recession is called a depression, although the definition of a depression has never been set by economists. Suffice it to say that economic numbers are generally on the negative side for many quarters.
For some jurisdictions, economic growth is better measured through other means, though these are usually local anomalies. For example, a city receiving most of its money through property taxes may consider it growth if property values go up. They may deduce because property values have increased, people are making improvements. If they are making improvements, growth is taking place. This may or may not be an accurate assumption.
The public at large may be tempted to measure economic change through job creation numbers. This is especially important to the general public, who are often not interested in production numbers. If jobs are being created, that means wealth is being created and spread. This may be, perhaps, one of the best measures of economic growth. If jobs are not being created or are being lost, this generally leads to a depressed economic state, especially for those affected individuals and perhaps for the region at large.
Economic growth means different things to different people. While economists, governments and individuals may all have their own opinions about what should constitute it, the truth is that all of these things working together help create an overall healthy economy. Without one piece, the entire puzzle may fall apart.