How to Forecast GDP Per Capita

Forecasting the GDP per capita is an important tool for economists, politicians and business people because it can reveal the approximate increased income of the national economy and its distribution amongst people. Forecasting the growth -- or shrink -- of people's share in the country's profit is just a matter of simple mathematical operations. The possibility of error depends on the accuracy of the economic indicators you're using, as well as on sudden and unexpected economic booms or downturns.

Instructions

    • 1

      Get the latest data on the nominal GDP and GDP growth of each country from reliable sources. These are the World Bank (worldbank.org), the OECD (Organization for Economic Co-operation and Development; oecd.org) and the CIA World Factbook. Also trust official national sources, such as the Bureau of Economic Analysis (bea.gov) for U.S. data or the Office for National Statistics (statistics.gov.uk) for the U.K.

    • 2

      Retrieve reliable information on a country's population and its growth rate. Again, credible sources are the CIA World Factbook and national statistics agencies, such as the U.S. Census Bureau (census.gov) and the French "INSEE" (insee.fr).

    • 3

      Convert the GDP growth indicator from a percentage to a decimal number. For example, 8 percent becomes 0.08 and 2.3 percent becomes 0.023.

    • 4

      Multiply the nominal GDP figure by the decimal number. The product is the expected surplus production on the following year. Add the product to the nominal GDP to calculate the approximate future GDP figure.

    • 5

      Repeat Steps 3 and 4 using total population and population growth data. This is especially important when a country's population growth -- or decline -- is particularly steep.

    • 6

      Divide the future nominal GDP figure by the future total population number to forecast GDP per capita.

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