GDP Per Capita Growth Rate Calculator
Result:
Understanding GDP Per Capita Growth Rate
The Gross Domestic Product (GDP) per capita is a key economic indicator that represents a country's economic output per person. It is calculated by dividing a nation's total GDP by its total population. The GDP per capita growth rate measures how much this value has increased or decreased over a specific period, providing insights into the country's economic progress and the standard of living for its citizens.
A positive GDP per capita growth rate generally signifies economic expansion and an improvement in the average economic well-being of individuals within that country. Conversely, a negative growth rate might indicate economic contraction or stagnation. Analyzing this rate over time helps policymakers, economists, and investors understand trends and make informed decisions.
The formula used to calculate the average annual GDP per capita growth rate is derived from the compound annual growth rate (CAGR) formula. It takes into account the initial and final values of GDP per capita and the number of years over which the growth occurred.
Formula:
Growth Rate = [ (Final GDP Per Capita / Initial GDP Per Capita) ^ (1 / Number of Years) ] – 1
The result is typically expressed as a percentage.
Example:
Let's say a country's GDP per capita was $10,000 in an initial year and grew to $12,000 after 5 years.
Initial GDP Per Capita = $10,000
Final GDP Per Capita = $12,000
Number of Years = 5
Growth Rate = [ ($12,000 / $10,000) ^ (1 / 5) ] – 1
Growth Rate = [ (1.2) ^ (0.2) ] – 1
Growth Rate = [ 1.0371 ] – 1
Growth Rate = 0.0371
Expressed as a percentage, the average annual GDP per capita growth rate is approximately 3.71%.