Economic Growth & Recession

Economic growth is an increase in a country's real Gross Domestic Product (GDP) over time. Real GDP is the total value of all goods and services an economy produces in a year, adjusted for inflation.

The key word in the definition is real: growth is measured by real GDP, not nominal GDP. Nominal GDP can rise simply because prices have gone up, whereas real GDP strips out price changes and measures genuine extra output.

Most developed economies aim for steady growth of around 2 to 3% per year: fast enough to raise incomes, slow enough not to trigger excess demand-pull inflation.