Important Considerations:
Traders should be aware of a few important considerations if they harness GDP when evaluating the strength of a nation. For starters, there is both nominal GDP and real GDP. Nominal GDP has not been adjusted for inflation, while real GDP has been altered to consider such increases in the price level. In economies where inflation is positive and not negative, real GDP should be lower than nominal GDP.
Investors interested in comparing the size of a nation’s economy between two different times may benefit from doing so with real GDP, as this figure considers how the price level changes over time.