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Home Finance Finance Resources Finance Formula GDP Per Capita Formula
 

GDP Per Capita Formula

Madhuri Thakur
Article byMadhuri Thakur

Updated July 26, 2023

GDP Per Capita Formula

 

 

GDP Per Capita Formula (Table of Contents)
  • Formula
  • Examples
  • Calculator

What is GDP Per Capita Formula?

The term “GDP per capita” refers to the assessment of the economic output of a country that accounts for the country’s population. In other words, GDP per capita is the gross domestic product of a country that is apportioned against its entire population.

However, it is important to note that usually real GDP (not nominal GDP) is used for the calculation of GDP per capita as it curbs the effects of inflation and aids comparison across the years. The formula for GDP per capita is quite simple and it can be derived by dividing the real GDP of a country by its population. Mathematically, it is represented as,

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GDP Per Capita = Real GDP / Population

Examples of GDP Per Capita Formula (With Excel Template)

Let’s take an example to understand the calculation of GDP Per Capita in a better manner.

You can download this GDP Per Capita Formula Excel Template here – GDP Per Capita Formula Excel Template

GDP Per Capita Formula – Example #1

Let us take the example of a country with a real GDP of $10 trillion during 2018 and a population of 250 million as on December 31, 2018. Calculate the GDP per capita for the country during the year 2018.

GDP Per Capita Formula Example 1-1

Solution:

GDP Per Capita of the country is calculated using the formula given below

GDP Per Capita = Real GDP / Population

GDP Per Capita Formula Example 1-2

  • GDP Per Capita = $10 trillion / 250 million
  • GDP Per Capita = $40,000

Therefore, the GDP per capita for the country stood at $40,000 during the year 2018.

GDP Per Capita Formula – Example #2

Let us take the example of a country with the following information for the year 2018. Calculate the GDP per capita of the country based on the given information.

Example of a country for the Year 2018

Solution:

Nominal GDP of the country is calculated using the formula given below

Nominal GDP = Private Consumption + Gross Investment + Government Investment + (Exports – Imports)

GDP Per Capita Formula Example 2-2

  • Nominal GDP = $6 trillion + $10 trillion + $4 trillion + ($2.5 trillion – $1 trillion)
  • Nominal GDP = $21.5 trillion

Real GDP of the country is calculated using the formula given below

Real GDP = (Nominal GDP / GDP Deflator) * 100

Calculation of Real GDP Example 2-3

  • Real GDP = $21.5 trillion / 125 * 100
  • Real GDP = $17.2 trillion

GDP Per Capita of the country is calculated using the formula given below

GDP Per Capita = Real GDP / Population

GDP Per Capita Formula Example 2-4

  • GDP Per Capita = $17.2 trillion / 500 million
  • GDP Per Capita = $34,400

Therefore, the GDP per capita for the country stood at $34,400 for the year 2018.

GDP Per Capita Formula – Example #3

Let us take the case of the US for the year 2018. The following information was available. Calculate the GDP per capita of the US-based on the given information.

GDP Per Capita Formula Example 3-1

Solution:

Nominal GDP of the US is calculated using the formula given below

Nominal GDP = Private Consumption of Goods + Private Consumption of Services + Gross Fixed Investment + Change in Private Inventories + Government Investment + (Exports – Imports)

Calculation of Nominal GDP

  • Nominal GDP = $4.34 trillion + $9.61 trillion + $3.60 trillion + $0.06 trillion + $3.52 trillion + ($2.53 trillion – $3.16 trillion)
  • Nominal GDP = $20.50 trillion

Real GDP of the US is calculated using the formula given below

Real GDP = (Nominal GDP / GDP Deflator) * 100

Calculation of Real GDP

  • Real GDP = $20.50 trillion / 111.256 * 100
  • Real GDP = $18.43 trillion

GDP Per Capita of the US is calculated using the formula given below

GDP Per Capita = Real GDP / Population

GDP Per Capita Formula Example 3-4

  • GDP Per Capita = $18.43 trillion / 328.23 million
  • GDP Per Capita = $56,137

Therefore, the GDP per capita for the US stood at $56,137 for the year 2018.

GDP Per Capita Formula 1

GDP Per Capita Formula 2

Link: https://www.bea.gov/system/files/2019-03/gdp4q18_ini_2.pdf

Explanation

The formula for GDP per capita can be derived by using the following steps:

Step 1: Firstly, determine the nominal GDP of the subject country on the basis of its private consumption, gross investment, government investment, exports and imports as shown below.

Nominal GDP = Private Consumption + Gross Investment + Government Investment + (Exports – Imports)

Step 2: Next, determine the GDP deflator which is a measure of the inflation of the country based on a designated base year.

Step 3: Next, calculate the real GDP of the country by dividing the nominal GDP (step 1) by the GDP deflator (step 2) as shown below.

Real GDP = Nominal GDP / GDP deflator

Step 4: Next, determine the population of the country and it is easily available at the governmental census websites of each country.

Step 5: Finally, the formula for GDP per capita can be derived by dividing the real GDP (step 3) of the country by its population (step 4) as shown below.

GDP Per Capita = Real GDP / Population

Relevance and Uses of GDP Per Capita Formula

It is important to understand the concept of GDP per capita because it serves as a tool to measure the economic prosperity of a country which is also used to compare countries and rank them accordingly. Interestingly, the GDP per capita growth will be negative for a country despite being a growing economy if its population grows faster than its GDP. “GDP per capita” is also referred to as “Per capita GDP”.

GDP Per Capita Formula Calculator

You can use the following GDP Per Capita Calculator

Real GDP
Population
GDP Per Capita
 

GDP Per Capita =
Real GDP =
Population
0 = 0
0

Recommended Articles

This is a guide to GDP Per Capita Formula. Here we discuss How to Calculate GDP Per Capita along with practical examples. We also provide a GDP Per Capita Calculator with downloadable excel template. You may also look at the following articles to learn more –

  1. Formula to Calculate Nominal GDP
  2. What is the Effective Interest Rate Formula?
  3. Examples of Consumer Price Index Formula
  4. Calculator For Return on Capital Employed Formula

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