How much you earn each month, the things you can buy with your money, and even the services you get from the government are all hugely dependent on our country’s Gross Domestic Product (GDP).
Yes, you may have heard the term before and, like many others, dismissed it as something that doesn’t really affect your life, but starting now, this can change.
As fancy as such economic references may sound, understanding them will help you become more aware and garner an interest in seemingly technical, but important, factors. If nothing else, it will make you sound smarter if you have to be around clever people discussing such things.
Simply explained, GDP is like a big scoreboard that shows how well a country's economy is doing. And it’s important for regular people like you and me because:
1. It affects the things we can buy and the services we can enjoy
When South Africa’s GDP goes up, it means the country is making and selling more things and providing more services. This is good because it usually means there are more products available for us to buy, and more opportunities to earn money.
2. It affects our job opportunities and the amount we can earn
When the economy is growing – which is when GDP goes up, businesses often pay their workers more, and more people can find jobs. So, we might get paid better or find a job more easily when GDP is on the rise.
3. The services we get from the government depend on it
The government takes the money it collects from the economy (through taxes) and uses this to provide important services like schooling, healthcare, and roads. When GDP is strong, the government has more money to spend on these services, which can benefit all of us.
4. It will affect how we save and invest our money
A growing GDP can make it easier for us to save money and invest it in things like stocks or property. When the economy is doing well, these investments tend to grow, helping us build wealth over time.
5. It gives us more confidence about our finances
When the GDP is going up, people usually feel more confident about their finances. They're more likely to spend money, which can help the economy even more – and in turn, help us more.
Basically, to break it down in a way we can all understand and appreciate, GDP matters to regular people because it affects the everyday things in our lives – and the important everyday things at that. When this big scorecard for our country’s financial health shows that we are up, it usually means good things for all of us.
Today, Stats SA will reveal South Africa’s GDP growth for the second quarter of the year. In Q1 2023, our GDP bounced back, expanding 0.4 percent from the previous quarter in which our economy contracted by 1.1 percent.
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