MACROECONOMICS

ASSIGNMENT 1
Zainab Fatima- 213118

REAL GDP:
Real gross domestic product (real GDP) is an inflation-adjusted measure that reflects the value of
all goods and services produced by an economy in a given year. It is often referred as “constant”
price.
Real GDP compares GDP from year to year and from different years more meaningful because it
shows comparisons for both the quantity and value of goods and services. It helps to measure a
country's total economic output, adjusted for price changes. Real GDP provides a better basis for
judging long-term national economic performance than nominal GDP. Using a GDP price
deflator, real GDP reflects GDP on a per quantity basis. Without real GDP, it would be difficult
to identify just from examining nominal GDP whether production is actually expanding—or it's
just a factor of rising per-unit prices in the economy.
Real GDP is calculated by dividing nominal GDP over a GDP deflator.
Nominal GDP is usually higher than real GDP because inflation is usually a positive number.
Real GDP is used for comparison of GDP of two or more years whereas nominal GDP is used
when comparing different quarters of output within the same year. Real GDP takes into
consideration adjustments for changes in inflation. This means that if inflation is positive, real
GDP will be lower than nominal, and vice versa. Without a real GDP adjustment, positive
inflation greatly inflates GDP in nominal terms.
 GDP
3500

3000

2500

2000

1500

1000

500

0
1990 1995 2000 2005 2010 2015 2021

PAKISTAN INDIA BANGLADESH IRAN

As of 2020; with $2,709 bn, India’s GDP0 is around ten times higher than Pakistan’s GDP of
$263 bn. In nominal terms, the gap is wider (above ten times) than ppp terms (8.3 times). India is
the 5th largest economy in the world in nominal method and 3rd largest economy in ppp method.
The margin between these two countries was lowest in 1993 when the Nominal GDP of India
was 5.39x of Pakistan, and the highest was in 1973 (13.4x). Both countries together share 10%
and 18.5% of total Asia’s GDP.
Comparing the graphs of Pakistan, India, Iran and Bangladesh, it shows that India’s GDP from
1990-2022 has slightly increased from 1990-2000 and from 2000-2021 has increased
significantly every year. From 2000 onwards the GDP of Pakistan and Bangladesh is recovering
while Iran’s GDP from 2011-2021 is recessing because of various political factors.
GDP GROWTH:
GDP growth is the percentage change of real GDP between two consecutive periods it seems to
measure improvement in the standard of living in a country. The growth rate of GDP is often
used as an indicator of the general health of the economy If it’s positive it means the country is
doing well and if negative it means the country is not doing so well
Pakistan GDP growth rate for 2021 was 6.03%, a 7.36% increase from 2020. Pakistan GDP
growth rate for 2020 was -1.33%, a 3.83% decline from 2019. Pakistan GDP growth rate for
2019 was 2.50%, a 3.65% decline from 2018.
After 19 years, India's GDP growth rate (-7.97) is lower than Pakistan's (-0.39) in 2020. India
attains a maximum GDP growth rate of 9.63% in 1988 and a minimum of -5.24% in 1979.
Pakistan reached an all-time high of 11.35% in 1970 and a record low of 0.47% in 1971. From
1961 to 2017, Pakistan grew by more than 10% in 3 years while India never. The GDP growth
rate was negative in four years for India, but Pakistan has never shown a negative growth rate.
Comparing the real GDP growth percentage shows that the percentage of Iran is having a
significant decrease leading to great depression from 1990-1995 while the other three countries
are recovering from 1996-2000 onwards Iran is recovering as well as Bangladesh but slightly.
India and Pakistan are sloping downwards means they are recessing. From 2001-2010 India,
Bangladesh and Iran all are recovering while India expanding the most in those years whereas
Pakistan still recessing . From 2011- 2015 Pakistan slope moves upwards significantly showing
booming as well as Bangladesh recovering while Iran showing great depression and India
showing recession. From 2016-2021 Iran, Pakistan and India recovering while Bangladesh
recessing.

GDP PER CAPITA:

GDP per capita, that is real GDP divided by population, as a measure of economic welfare or
standard of living in a nation.
Both countries have been neck-to-neck in GDP per capita terms. From 1960 to 2006, India was
richer than Pakistan for only five years. GDP per capita of Pakistan was 1.54x of India in 1970.
Margin is being wider in favor of India since 2009. In 2020, India's per capita income was 1.56
times higher than Pakistan's on an exchange rate basis, with an all-time high of 1.63x in 2019.
2006 is the previous year when Pakistan was richer than India. Both nations are at a very lower
position in World GDP per capita ranking. The rank of India is 147 (nominal) and 130 (PPP).
The world rank of Pakistan is 160 (nominal) and 144 (PPP). Out of 33 Indian states/UTs,
28 states/UTs are richer than Pakistan.
Comparing the GDP per capita graph Iran’s graph is the one increasing the most until 2010
leading to expansion while from 2010 onwards their is a large drop showing great depression
while India, Bangladesh and Pakistan is recovering slightly almost every year except for
Bangladesh which has a more slant line than the other two.
UNEMPLOYMENT
Unemployment occurs when someone is willing and able to work but does not have a paid job.
The unemployment rate is the percentage of people in the labor force who are unemployed
  Comparing the unemployment rate of Iran, India, Pakistan and Bangladesh the graph
shows that the unemployment rate of Iran is higher than all countries while is recessing
until 1995. The other three countries like Pakistan is having a very less percentage of
unemployment rate until 1995 while Bangladesh and India is recovering slightly. From
1996-2000 Iran and Bangladesh rate is increasing means recovering while the other two
countries are slightly stable. From 2001- 2005 India and Pakistan is stable while
Bangladesh is recessing and Iran is recovering. From 2006-2010 India and Pakistan are
again stable while Bangladesh is recessing and Iran is recovering. From 2011-2015 India
is slightly recessing and Iran is recessing significantly while the other two countries are
recovering. From 2016-2021 all the four countries are recovering slightly.

INFLATION
Inflation is a general and ongoing rise in the level of prices in an entire economy.
The inflation rate of all the four countries when compared shows that over the years from 1990-
1995 the inflation rate of Iran has shown a significant expansion while the other three countries
are recovering. From 1996-2000 Iran shows a large drop means great depression while the other
three countries decrease slightly showing recession. From 2001- 2005 inflation rate of Iran and
India has decreased slightly means recession and the Pakistan and Bangladesh has increased
slightly means recovery. From 2006-2010 Bangladesh and Iran are recessing while other two
countries are recovering. From 2011-2015 all the countries are recessing except Iran as it is
recovering. From 2016- 2021 Iran is significantly expanding while Pakistan is slightly expanding
means recovery while the Bangladesh and India are recessing over these years.
Conclusion:
PAKISTAN INDIA BANGLADESH
GDP $ 346.3 3173.4 416.3
GROWTH CAPITA 1537.9 2277.4 2503
GROWTH RATE% 6.03 8.9 6.9
INFLATION% 9.5 5.1 5.5
UNEMPLOYEMENT% 4.4 6 5.2