Answer to Question #92828 in Macroeconomics for Nandy

Question

GDP gives the picture from the consumers’ side, while GVA gives the picture from the producers’ side. By definitions of both GDP and GVA "the amount of goods and services PRODUCED in an economy in a year". Here is my question, if both GDP and GVA are 'produced' side according to definition then why GDP from consumer's side and GVA from producer's side? I am confused so please clarify my doubt.

Answer 1

The govt can easily retain both measures: GDP for evaluating demand side situation(consumer side), and GVA evaluating supply side situation (production side). Typically GVA is for understanding specific sectorwise growth rates and not the country as a whole. Both have there own uses. Why is it replacing GVA by GDP? Both can easily be calculated using the primary data available at CSO.