CLE2022 - Economics & Business Finance for Civil Engineers

DIGITAL ASSIGNMENT-1
Economic Systems & GDP

Submitted by:
Arjun Krishna, 20BCL0002
Submitted to:
16201 - Prasanna Venkatesan R – SCE
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 CONTENTS
INTRODUCTION .................................................................................. 3
INDIA GDP CURVE & GDP ANALYSIS ............................................ 4
SWITZERLAND GDP CURVE & GDP ANALYSIS ........................... 6
CUBA GDP CURVE & GDP ANALYSIS............................................. 8
SUMMARY ........................................................................................... 10
REFERENCE ......................................................................................... 11

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 Introduction
GDP is the total market value of all the goods and services produced within a
country in a specific time period. It functions as an Indicator of a country’s
economic status. It is generally calculated on annual basis, but sometimes it’s
calculated on quarterly basis as well (ex: United states of America). We will be
discussing about the GDP curve of countries with different economies (Mixed
economy, Free Market economy, Command economy), how several factors affect
the GDP and a brief review about the economic trends of the countries.

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 GDP CURVE & GDP ANALYSIS

INDIA (Mixed Economy)

YEAR GDP GROWTH (annual %)

2017 6.795383419
2018 6.453851345
2019 3.73791852
2020 -6.596080522
2021 8.947962669

10

8
GDP growth rate (annual %)

0
2017 2018 2019 2020 2021
-2

-4

-6

-8
Year

YEAR GDP (in Trillions of US$)

2017 2.65
2018 2.7
2019 2.83
2020 2.67
2021 3.17

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 GDP of India (Last 5 years)
3.3
3.2
3.1
GDP (Trillions of US$)

3
2.9
2.8
2.7
2.6
2.5
2.4
2.3
2017 2018 2019 2020 2021
Year

Indian economy is a mixed economy. The Covid-19 pandemic significantly

affected the Indian economy like every other country which resulted in a GDP
of 2.67 trillion USD and GDP growth rate of -6.6. But even before the
pandemic the Indian economy was weakening as a result of certain government
policies like demonetisation of 86% of India’s currency and hastily
implemented goods and service tax.
Now, Indian economy has fully recovered to the pre pandemic real GDP level
of 2019-20. GDP growth for the year 2021-22 has reached 8.9% which is 1.5%
higher than the real GDP in FY 2019-20. These figures indicate an increased
economic demand. The investment rates in the fourth quarter increased to its
highest compared to the previous nine quarters. Moreover, capacity utilization
in manufacturing sector also increased. All these factors helped India to revive
from the GDP downfall caused due to the pandemic. Considering the fiscal year
ended in March 2022, the economy advanced 8.7%. RBI estimated the GDP
growth rate for FY 2023 as 7.2%. After recording this strongest GDP rebound,
Indian economy is progressively losing momentum as inflationary expectations
remains elevated due to rising global energy & food prices, monetary policy
normalises & global conditions deteriorate. Inflation will decline gradually but
the current account deficit will widen due to increased energy import costs.
However, India has emerged as the fastest-growing major economy in the
world, and is expected to be one of the top three economic powers globally over
the next 10-15 years.

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SWITZERLAND (Free Market Economy)

YEAR GDP GROWTH (annual %)

2017 1.584819616
2018 2.916905098
2019 1.210992207
2020 -2.392826042
2021 3.69215263

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GDP growth rate (annual %)

0
2017 2018 2019 2020 2021
-1

-2

-3
Year

YEAR GDP (in Billions of US$)

2017 704
2018 736
2019 732
2020 752
2021 813

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 GDP of Switzerland (Last 5 years)
840
820
800
GDP (Billiosn of US$)

780
760
740
720
700
680
660
640
2017 2018 2019 2020 2021
Year

Switzerland’s economy is a Free-Market Economy. Like every other country

economy, Switzerland’s economy was also hit by the covid pandemic leading to
a decline of GDP growth to -2.39 %. But post pandemic GDP growth shot up to
+3.69% with a GDP of 813 billion US$. Real GDP exceeded pre-pandemic
levels by the third quarter of 2021 and growth has continued. Household
consumption is the main component of Swiss GDP (54% of total) followed by
gross fixed capital formation, government expenditure & foreign trades. The
GDP growth is likely to slacken this year due to slower export growth & mild
government consumption. Also, the Ukraine war and weakening of trade links
with European Union will moderate the growth of exports and investments.
However rising prices of energy & goods affected by supply bottlenecks will be
a head wind to growth. However, momentum will still be supported by the
healthy labour market & reduced impact of the pandemic. Labour market has
continued to improve as the number of unemployed workers decreased and the
number of Job vacancies increased. The economy is expected to expand 2.6%
by 2022 and 1.8% by 2023.

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CUBA (Command Economy)

YEAR GDP GROWTH (annual %)

2016 0.513761468
2017 1.809054399
2018 2.248480393
2019 -0.164839982
2020 -10.94834097

2
GDP growth rate (annual %)

0
2016 2017 2018 2019 2020
-2

-4

-6

-8

-10

-12
Year

YEAR GDP (in Billions of US$)

2016 91.37
2017 96.85
2018 100.05
2019 103.43
2020 107.35

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 GDP of Cuba (2016-2020)
110

105
GDP (Billions of US$)

100

95

90

85

80
2016 2017 2018 2019 2020
Year

In 2020, Cuban economy significantly shrank by 10.9%. This was the steepest
drop in decades. This decline started around 2019 and worsened by the arrival
of pandemic which led to domestic imbalances, trade issues etc. Foreign
exchange shortages also choked the economy. Public finances were totally
eroded due to monetary restructuring process, wage hikes & additional expenses
caused by the pandemic. The tightening of sanctions by the US and restricted
supply of oil made the situations worse. Although Cuban government had been
forecasting a fiscal deficit of 6.8% GDP in 2020, situations worsened owing to
drop in tax revenue, increased public spending, wage guarantees etc. The
pandemic also affected tourism revenues which represents 28% of total service
exports. The Cuban government took certain measures to normalize the
situation and bring the GDP growth rate back to positive figures, which include
allowing non-state companies to carry out foreign trade activities, promoting
non-agricultural cooperatives, promoting self-employment, increase the supply
of products in foreign currency, elimination of 10% tax on transfers in US
dollars, decentralization of tax management & budget execution etc. GDP is
forecasted to amount to 135 billion US$ by 2025 and real total GDP is expected
to grow by 5.79% by 2025.

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 Summary

The GDP curves for 3 different countries following 3 different economic systems
were plotted and their economic trends were analysed. It was understood that
countries following free market economic system tend to have more stable &
steady growth economies compared to mixed & command economies. Also
command economies are outdated economic systems which might not survive in
a global economy of competitive markets. It was found that most of the country’s
economy was affected seriously due to the pandemic and most of them recovered
from it as well but still post pandemic effects are troubling certain economies.
War & Increased oil/energy prices are other problems which act as a head wind
against growth in most of the countries.

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 References

GDP & GDP growth rate data were taken from World Bank
https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?end=2021&locatio
ns=IN&start=2017&view=chart
https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=CH
https://data.worldbank.org/indicator/NY.GDP.MKTP.KD\.ZG?locations=CU
https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=IN
https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=CU
https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=CH
https://www.ibef.org/economy/indian-economy-
overview#:~:text=Introduction,GDP%20in%20FY%202019%2D20.
https://www.oecd.org/economy/india-economic-snapshot/
https://www.heritage.org/index/country/switzerland
https://www.heritage.org/index/country/cuba

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