Financial news often refers to “gross national product” or GNP. This is an important part of the economy, which plays a significant role in the market sphere. We will talk about the importance of GNP and its features.
Gross national product (GNP) is the market value of all goods and services produced in the national economy for a certain period (usually a calendar year).
Moreover, it does not matter where these services and goods were produced, domestically or abroad, the main thing is that they be part of the national economy, that is, belong to the country.
From the term “gross national product” itself, it is understood that we are talking about all the aggregate products that are part of the country's national products. But only the final product that was produced during the designated time period, usually a calendar year, is taken into account. Also, in 1993, the term was changed to Gross National Income (GNI), but the meaning has not changed. GNI can be considered a synonym for GNP.
GNP is part of special indicators that are part of the System of National Accounts (SNA), created by the UN specifically to reflect the economic condition of a country. The national economy in the SNA is displayed as a kind of general system, including the production, accumulation, redistribution and consumption of the product. And in the SNA, the Gross National Product is responsible for analyzing the monetary designation of the volatility of the country's national economy.
There are several ways to calculate GNP. In this case, market prices are always used, that is, monetary indicators. Non-production transactions and intermediate goods are not included in the calculation of GNP.
For the calculation of the Gross National Product, several methods are used:
1. End-use method - for the cost of purchasing all manufactured final products for the year. This includes calculations for the use of goods and services, expenses for investments (for the purchase of new equipment and for the reimbursement of unusable equipment). Also, this includes general public finances for the production of services (calculation is carried out at cost) and all exports (all created domestically, but sold outside it).
2. Distribution method - calculation of income from all manufactured products for the year. Revenues calculated using this method include:
3. The production method - the calculation of the amount of value added for all sectors of the national economy. This method includes:
In principle, regardless of which of these methods is used, the final result will be the same. The money that product buyers spend become the income of the product manufacturers.
It is also very important to note which indicators are not included in the calculation of GNP and why. This is necessary for a correct understanding of what cannot be part of GNP.
All types of non-production transactions are not included in the calculation of GNP, because they do not affect the changes in the national economy.
Non-production transactions are divided into several types:
Also, it is important to know that the Gross National Product does not reflect:
Gross National Product is usually divided into several types:
Many may confuse the Gross Domestic Product with the Gross National Product but this is a mistake, as they vary greatly
GDP reflects the welfare of a country's citizens and shows the total market value of domestically produced. While GNP is a monetary indicator on the volatility of national production, products and services that are produced both domestically and abroad.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 58% of investor accounts lose money when trading CFDs with this broker. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
IMPORTANT: Please be informed, that our services are available for Professional Clients only.
|By clicking "Continue" you will be redirected to the website operated by FIBO Group, LTD company registered in BVI and regulated by FSC. Please familiarize yourself with the Customer Agreement through the link. Click "Cancel" to remain on this page.|