Forex Dictionary Terms

Gross Domestic Product (GDP)

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Definition – What does Gross Domestic Product (GDP) mean?

Gross domestic product (GDP) is an economic measure that adds up the value of all the goods and services produced in a country over a specific time period. GDP figures are traditionally released on an annual basis, but some countries provide updates on a quarterly or monthly basis.

ForexTerms explains Gross Domestic Product (GDP)

The release dates of GDP figures are important to forex traders because a country’s GDP performance usually has an immediate effect on the country’s currency. Generally speaking, if GDP has grown, the market reaction will be positive. If GDP has shrunk or hasn’t grown as much as the market expected, then the currency may see a dip.

The accuracy of GDP figures have been an issue, as some economists question reporting practices in other nations and other economist question the value of GDP itself. For forex traders, however, GDP releases are an opportunity to trade on market fundamentals.

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