What is economic growth?

Economic growth refers to the increase in a country’s output of goods and services over time, which is measured by the rise in real Gross Domestic Product (GDP). When an economy is experiencing growth, it typically signifies improvements in productivity, advances in technology, increases in capital investment, and a rising standard of living for its citizens.

This concept is crucial because it not only reflects the ability of an economy to produce more but also often correlates with higher employment rates, better public services, and increased consumer spending. Therefore, the definition captures the essence of prosperity and development within an economy, distinguishing it from other economic states such as recession or stagnation.

While stabilization of the economy and reduction of inflation rates may contribute to an environment where growth is more achievable, they do not themselves define economic growth. Similarly, a decrease in output is indicative of an economic downturn rather than growth.