Economic Growth Definition & Examples

Published Dec 26, 2022

Definition of Economic Growth

Economic Growth is defined as an increase in the production of goods and services in an economy over a period of time. That means it is a measure of the increase in the total output of an economy, usually measured as the percentage change in the real gross domestic product (GDP) from one period to the next.

Example

To illustrate this, let’s look at the US economy in 2022. In the second quarter of the year, the US GDP was USD 19.9 trillion. In the third quarter, it was USD 20.1 trillion. That means the US economy grew by 0.7% in the third quarter compared to the second quarter. Thus, the US experienced economic growth in the third quarter of 2022.

Note: For the most recent numbers, check the website of the U.S. Bureau of Economic Analysis.

Why Economic Growth Matters

Economic growth is an important indicator of the health of an economy. It shows how well an economy performs and how much it can produce. In general, a higher rate of economic growth means more jobs, higher wages, and a better standard of living for the citizens of the country. That’s why governments and central banks around the world strive to achieve a high and sustainable economic growth rate.

Disclaimer: This definition was written by Quickbot, our artificial intelligence model trained to answer basic questions about economics. While the bot provides adequate and factually correct explanations in most cases, additional fact-checking is required. Use at your own risk.