Yesterday Australia’s economy got its quarterly checkup, and Gross Domestic Product performance, or GDP, grew by 1.5% over a year.
Motley Fool’s chief investment officer Scott Phillips explained that GDP, Gross Domestic Product, adds up Australia’s goods, services and exports to size up the economy.
How does GDP growth affect our lives? Is this an economy at panic stations? Motley Fool investment officer Scott Phillips explains on The Briefing:
“Add up all of the things that we do, all the services, so they’ve got hairdressers and physios and bankers… The houses we build, the machines we build… the exports like wheat for example or iron ore,” Phillips said.
The Briefing host Bension Siebert asked, “Yesterday we heard that the GDP grew by 1 .5 per cent over a year. Is that bad? Is that good? Medium?”
“Yes is the answer to all of those things. Look, we want the economy probably to grow about two to three per cent per year. Now, you might say, why not more?”
“Think about inflation rates. If an economy overheats, grows too strongly, it creates problems. If it doesn’t go strongly enough, then we end up having, frankly, we get poorer.”
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