Tag: What is gross domestic product (GDP)?

Gross domestic product (GDP) is the total value of goods and services produced in a country during a year.

GDP is often referred to as the economic report card of a country. The level of GDP reveals information about the size of an economy, while the change in GDP from one period to another period indicates whether the economy is expanding or contracting.

The monetary value associated with gross domestic product can also be used as a measure of the importance of a country’s stock markets. It’s used to show the cumulative economic performance of a country and is used for global comparisons.

For example, the Market Vectors Africa Index ETF, symbol AFK on New York, aims to match the performance of the Market Vectors GDP Africa Index. This index tracks the performance of the largest and most liquid companies in Africa. A country’s weighting in the index is determined by the size of its gross domestic product.

Gross domestic product was coined as a term in mid to late 1600s when William Petty created the basic concept of GDP for defending landlords from unfair taxation during wartime.

Overall, gross domestic product can be determined in three ways and each method should provide the same result. These approaches are the production approach (including value added or output), the expenditure approach, and the income approach.

In some countries, a significant portion of their gross domestic product is concentrated in one sector—for example, resources in Canada, including mining.

At TSI Network, we recommend using our three-part Successful Investor philosophy:

  1. Invest mainly in well-established companies;
  2. Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities);
  3. Downplay or avoid stocks in the broker/media limelight.

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Q: Pat, I want to invest in Swiss stocks and was wondering what your thoughts are on Switzerland, in general, and the iShares MSCI Switzerland ETF, in particular? Thank you.

January 29, 2019||How To Invest

A: Switzerland has a strong economic system where the country’s revenue exceeds its expenses, so there is no deficit. That improves its self-reliance and the stability of its currency.

The country also has flexible labour markets, high productivity and an emphasis on high-value exports that are… Read More

Infrastructure opens up to private buyers

January 10, 2019||ETFs

Infrastructure assets such as toll roads, airports or port facilities have long been available only to large institutional investors or private equity funds. However, with a global focus on the development of infrastructure and a shortage of government funding, more of these unique investments have… Read More

Russia ETF reflects country’s significant risk

January 10, 2019||ETFs

Declining commodity prices and international sanctions have hurt the Russian economy. But despite that, the country has proved surprisingly resilient. The economy is on a modest growth path, government finances are in reasonable shape, inflation is under control and the currency has stabilized.
Here is one… Read More

Brazil needs to harness its huge potential

September 13, 2018||ETFs

Several factors contributed to Brazil’s 2015-2016 recession, one of its worst: political turmoil, corruption at one of the country’s major corporations, volatile commodity prices, and high inflation. However, starting in 2017, the country has slowly emerged from that crisis. which is fuelling new hope for… Read More

Outlook is bright for big exporter Germany

August 16, 2018||ETFs

Germany faces a number of challenges—its population is getting older and its workforce will start to shrink from 2020 onwards. In addition, its largest export markets, including the U.S. and the U.K., are less and less willing to run large trade deficits with Germany. However,… Read More

Norway looks to ease its energy dependence

April 12, 2018||ETFs

An abundance of oil and natural gas resources has made Norway one of the wealthiest countries in the world. However, efforts are underway to diversify its economy beyond natural resources, and there are early signs of success.
Time will tell how complete or successful that transition… Read More