GDP: gross domestic product refers to the value of all final products and services produced by a country or region in a certain period of time (a quarter or a year), which is generally recognized as the best indicator to measure the economic situation of a country. It can not only reflect a country's economic performance, but also reflect a country's national strength and wealth. Generally speaking, GDP has four different components, including consumption, private investment, government expenditure and net exports. In the formula of GDP: C + I + C + X, C is consumption, I is private investment, C is government expenditure, and X is net export. It can be seen from the change of the number that whether the economy of a country or region is in the stage of growth or recession. Generally speaking, there are no more than two forms of GDP publication, in terms of total amount and percentage rate. When the GDP growth figure is positive, it means that the economy of the region is in the stage of expansion; otherwise, if it is negative, it means that the economy of the region has entered a recession. Because GDP refers to the total amount of goods and services produced in a certain period of time multiplied by & quot; currency price & quot; or & quot; market price & quot;, it is the nominal GDP. Nominal GDP growth rate is equal to the sum of real GDP growth rate and inflation rate. Therefore, even if the total output does not increase and only the price level rises, the nominal GDP will still rise. In the case of price rise, the rise of GDP is only an illusion. However, the real GDP change rate has a substantial impact. Therefore, when using GDP as an indicator, we must adjust the nominal GDP through the GDP reduction index, so as to accurately reflect the real change of output. Therefore, the increase of GDP reduction index in a quarter is enough to indicate the inflation situation in that quarter. If the GDP reduction index increases by a large margin, it will have a negative impact on the economy. At the same time, it is also a precursor to the tightening of money supply, the rise of interest rates, and then the rise of foreign exchange rate. How to interpret this indicator? "> the appeal of the country's currency. Conversely, if a country's GDP has a negative growth, it shows that the country's economy is in a state of recession and its consumption capacity is reduced. The central bank is likely to cut interest rates to stimulate economic growth again, and as interest rates fall and the economy falters, the attractiveness of the country's currency diminishes. Therefore, generally speaking, high economic growth rate will drive up the exchange rate of domestic currency, while low economic growth rate will cause the exchange rate of domestic currency to fall. For example, in 1995-1999, the annual average growth rate of GDP in the United States was 4.1%, while in the 11 countries of the euro area, except Ireland, the growth rate was higher (9.0%), while the growth rates of GDP in France, Germany, Italy and other major countries were only 2.2%, 1.5% and 1.2%, which was much lower than that of the United States. This has contributed to the decline of the euro against the US dollar since it was launched on January 1, 1999, falling by 30 per cent in less than two years.
but in fact, the difference of economic growth rate has many effects on the change of exchange rate: first, a country's high economic growth rate means that the increase of income and the increase of domestic demand level will increase the country's import, resulting in the current account deficit, which will make the exchange rate of its currency fall. Second, if the country's economy is export-oriented and its economic growth is to produce more export products, the growth of exports will make up for the increase of imports and slow down the pressure of the decline of the domestic currency exchange rate. Third, a country's high economic growth rate means that labor productivity increases rapidly, cost reduction improves the competitive position of its own products, which is conducive to increasing exports and curbing imports. Moreover, the high economic growth rate makes the country's currency optimistic in the foreign exchange market, so the country's currency exchange rate will have an upward trend in the United States, the Department of commerce is responsible for the analysis and statistics of GDP, which is usually estimated and counted quarterly. Each time the preliminary estimates are published, there will be two revisions (the first review & the final review), mainly in the third week of each month. GDP is usually used to compare with the same period last year. If there is an increase, it means that the economy is relatively fast, which is conducive to the appreciation of its currency. If there is a decrease, it means that the economy is slowing down and its currency is under pressure to depreciate. For the United States, a growth rate of 3% of GDP is an ideal level, indicating that economic development is healthy, and a growth rate higher than this level indicates that there is currency pressure; a growth rate lower than 1.5% indicates a sign of economic slowdown and gradual recession.