Real and Nominal GDP – The Basic Difference

GDP, or Gross Domestic Product is the value of all the goods and services produced in a country.
The Nominal Gross Domestic Product measures the value of all the goods and services produced
expressed in current prices. On the other hand, Real Gross Domestic Product measures the value
of all the goods and services produced expressed in the prices of some base year. An example:

Suppose in the year 2000, the economy of a country produced $100 billion worth of goods and
services based on year 2000 prices. Since we're using 2000 as a basis year, the nominal and real
GDP are the same. In the year 2001, the economy produced $110B worth of goods and services
based on year 2001 prices. Those same goods and services are instead valued at $105B if year 2000
prices are used. Then:

Year 2000 Nominal GDP = $100B, Real GDP = $100B

Year 2001 Nominal GDP = $110B, Real GDP = $105B
Nominal GDP Growth Rate = 10%
Real GDP Growth Rate = 5%

Once again, if inflation is positive, then the Nominal GDP and Nominal GDP Growth Rate will be
less than their nominal counterparts. The difference between Nominal GDP and Real GDP is
used to measure inflation in a statistic called The GDP Deflator.

Pakistan GDP or the Gross Domestic Product of Pakistan decides the growth of Pakistan's
economy. In spite of the fact that Pakistan is among the highest populated nations and that much
of the citizens do not even earn a decent living, the country is fast improving its economic status.
The economy growth of Pakistan is among the top three developing nations in the world, the
other two being China and India. The growth percentage of Pakistan GDP was calculated as 8.45
% in 2005. Much of the success of the economy owes it to the telecommunication industry as well
as the growing Information Technology sector.

Latest Indicators for Pakistan

GDP (official exchange rate): $124 billion (2006 est.)

GDP - per capita (PPP): $2,600 (2006 est.)

GDP - real growth rate: 6.6% (2006 est.)

GDP (purchasing power parity): $437.5 billion (2006 est.)

GDP - composition by sector: agriculture: 22%

industry: 26%

services: 52% (2006 est.)

The good news about the Pakistan economy development is that the government has been truly
successful in bringing down the poverty levels very successfully in the last 6 years. The economy
of the country has now reached a steady statistics. The proof of this lies in the fact that even after
the 2005 earthquake, the country was strong enough to sustain the loss.
 Pakistan GDP - real growth rate
GDP - real growth rate: 6.3% (2007 EST.)

Year GDP-Growth Rate real Rank % change Date of Information

2003 4.50 % 48 FY01/02 est.
2004 5.50 % 45 22.22 % 2003
2005 6.10 % 47 10.91 % 2004
2006 6.60 % 48 8.20 % 2005
2007 6.60 % 59 0.00 % 2006
2008 6.30 % 62 -4.55 % 2007

Definition: This entry gives GDP growth on an annual basis adjusted for
inflation and expressed as a percent.

Equivalent Data From the International Monetary Fund

Variable: Gross domestic product, constant prices

Note: Annual percentages of constant price GDP are year-on-year changes; the
base year is country-specific.

Units: Annual percent change

 GDP (official exchange rate): $106.3 billion (2007 est.)

Definition: This entry gives the gross domestic product (GDP) or value of all
final goods and services produced within a nation in a given year. A nation's
GDP at offical exchange rates (OER) is the home-currency-denominated annual
GDP figure divided by the bilateral average US exchange rate with that country
in that year. The measure is simple to compute and gives a precise measure of
the value of output. Many economists prefer this measure when gauging the
economic power an economy maintains vis-à-vis its neighbors, judging that an
exchange rate captures the purchasing power a nation enjoys in the international
marketplace. Official exchange rates, however, can be artifically fixed and/or
subject to manipulation - resulting in claims of the country having an under- or
over-valued currency - and are not necessarily the equivalent of a market-
determined exchange rate. Moreover, even if the official exchange rate is market-
determined, market exchange rates are frequently established by a relatively
small set of goods and services (the ones the country trades) and may not capture
the value of the larger set of goods the country produces. Furthermore, OER-
converted GDP is not well suited to comparing domestic GDP over time, since
appreciation/depreciation from one year to the next will make the OER GDP
value rise/fall regardless of whether home-currency-denominated GDP changed.

Equivalent Data

Variable: Gross domestic product, current prices

Note: Values are based upon GDP in national currency and the exchange rate
projections provided by country economists for the group of other emerging
market and developing countries. Exchanges rates for advanced economies are
established in the WEO assumptions for each WEO exercise.

Units: U.S. dollars

Scale: Billions
 Nominal GDP Rate of Pakistan – Estimated for 2008-2014

November 2008
Pakistan 160.152 175.452 192.350 211.351 231.575 254.113 277.392
Base Year

Nominal GDP Rate of Pakistan per Capita Income - Estimated 2008- 2013

2006
Pakistan 1,000 1,048 1,082 1,142 1,211 1,288
Base Year

Pakistan overall GDP Rate of last years (Nominal GDP)

2003 2002 2001 2000 1999 1998

Pakistan 68,815 59,235 58,765 60,933 58,605 62,228

Method of Calculating of GDP in Pakistan

GDP at purchaser's prices is the sum of gross value added by all resident producers in
the economy plus any product taxes and minus any subsidies not included in the value of the
products.

It is calculated without making deductions for depreciation of fabricated assets or for

depletion and degradation of natural resources. Data are in current U.S. dollars. Dollar figures for
GDP are converted from domestic currencies using single year official exchange rates. For a few
countries where the official exchange rate does not reflect the rate effectively applied to actual
foreign exchange transactions, an alternative conversion factor is used.
 Historical Data 1964-2006 of Pakistan

2006 $128,830,200,000.00 #41

2005 $111,298,900,000.00 #44
2004 $97,994,780,000.00 #46
2003 $82,343,220,000.00 #45
2002 $71,479,360,000.00 #47
2001 $71,498,690,000.00 #42
2000 $73,320,820,000.00 #44
1999 $62,973,850,000.00 #44
1998 $62,191,960,000.00 #44
1997 $62,433,340,000.00 #45
1996 $63,320,170,000.00 #45
1995 $60,636,070,000.00 #44
1994 $51,894,800,000.00 #46
1993 $51,478,360,000.00 #42
1992 $48,635,240,000.00 #42
1991 $45,451,960,000.00 #40
1990 $40,010,420,000.00 #45
1989 $40,171,020,000.00 #43
1988 $38,472,740,000.00 #42
1987 $33,351,530,000.00 #44
1986 $31,899,070,000.00 #39
1985 $31,144,920,000.00 #39
1984 $31,151,820,000.00 #38
1983 $28,691,890,000.00 #40
1982 $30,725,970,000.00 #39
1981 $28,100,610,000.00 #42
1980 $23,689,700,000.00 #44
1979 $19,707,980,000.00 #45
1978 $17,820,100,000.00 #41
1977 $15,126,060,000.00 #41
1976 $13,338,490,000.00 #42
1975 $11,340,000,000.00 #45
1974 $8,773,031,000.00 #50
1973 $6,324,884,000.00 #51
1972 $9,309,109,000.00 #34
1971 $10,602,060,000.00 #29
1970 $10,027,090,000.00 #28
1969 $8,632,927,000.00 #29
1968 $8,090,088,000.00 #28
1967 $7,403,822,000.00 #26
1966 $6,466,611,000.00 #28
1965 $5,884,712,000.00 #29
1964 $5,130,515,000.00 #29