Nowadays, we have been hearing news pertaining to the current situation of economy, not just of the Philippines but of the whole world, following the aftermaths of the supply chain interruptions caused by the Covid-19 lockdowns, ongoing wars between Russia and Ukraine and Israel and Gaza, and the escalating tensions between China and Taiwan, among others. These international political and social implications are truly causing havoc to macroeconomic situations of many countries, especially the developing ones.
Did you ever wonder how economies estimate their current economic situations? What are the implications that both economists and policy makers need to consider before making any decisions to improve the macroeconomics situation? How do these policies influence the daily lives of the citizens? Bria Homes will guide you through to understanding the fundamental economic principles highlighting the difference between the Gross Domestic Product (GDP) and Gross National Product (GNP) that have become the international standard in measuring the size of one economy.
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Difference Between Macroeconomic and Microeconomics
Prior to proceeding to differentiating Gross Domestic Product and Gross National Product, it is necessary to have a full grasp of elementary economics by identifying the difference between microeconomics and macroeconomics. Microeconomics is a branch of economics that focuses on the implications of incentives and decisions of individuals and businesses, specifically about how those affect the utilization and distribution of resources. On the other hand, macroeconomics studies how an overall economy- the market, government, and other systems that operate on a large scale– behaves. While macroeconomics focuses on economy-wide phenomena like inflation, exchange rates, economic growth and development, national income and deficit, unemployment, GDP and GNP, microeconomics provides a more complete and detailed understanding of the economy as this branch of economics underscores the daily lives and behavior of individuals.
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Understanding the Gross Domestic Product (GDP)
Gross Domestic Product or GDP is a macroeconomic concept that measures the total monetary value or market value of all goods and services produced within a country’s territory in a specific period. As a broad measure of the total domestic production, it functions as a primary basis of knowing the economic health or status of a given country. With that in mind, all countries aim to increase their GDP. Basic to increasing the GDP is the creation of new enterprises or expansion of the existing ones as these new economic activities will not just improve productivity, but more importantly is that it will generate new jobs that will help provide income for the citizens.
Another primary measure used by economists and policy alongside the GDP is the GDP Per Capita. GDP Per Capita is a financial metric that breaks down a country’s economic output per person and is calculated by dividing the GDP of a nation by its population. In layman’s terms, GDP Per Capita is the supposed annual income of an individual based on the country’s total market value measured by the GDP. Hence, the constant increase in population should be accompanied by the increase in GDP to continually provide a source of living and to also improve the quality and standard of living of every citizen. The valuation or devaluation of the GDP is measured by its growth rate.
The value of a country’s GDP is computed by adding 4 major economic components namely Public Consumption, Capital Spending by Business, Government Spending, and Net Exports. Based on the components of GDP, it is important to take note that it is not enough for an economy to just keep on producing to be identified as “healthy”. An important component is that the public has the purchasing power to keep the economy circulating. That is why a country with an outstanding GDP should not just be productive but also has a good quality and standard of living.
In the Philippines, the Gross Domestic Product is measured quarterly and annually by the Philippine System of National Accounts (PNSA) under the Philippine Statistics Authority (PSA). According to the PSA, the Philippines ‘GDP posts an 8.3 percent growth in the first quarter of 2022 – the fastest in the region according to NEDA – and in 2021, the country’s annual GDP growth was 5.6 percent. This GDP growth of the Philippines in 2021 was the second fastest in Southeast Asia after Singapore at 7.6 as reported by the Asian Development Bank. As one of the fastest growing economies in Asia and the world, the Philippines’ GDP last year was about $894 Billion with a GDP Per Capita of $3,458 according to the World Bank data.
Differentiating Gross National Product (GNP)
Gross National Product (GNP) is almost synonymous with the Gross Domestic Product. GNP is the estimated total value of all the final products and services turned out in a given period by the means of production owned by a country’s residents. This simply means that what is being accounted for is the productivity of the citizens, including those working overseas, and not based on a given territory. As earlier mentioned, GNP has a close meaning and relation with GDP. GNP begins with GDP and includes the investment income from overseas investment of the resident and subtracts foreign residents investment income earned within a given territory.
In the Philippines, the common measure or term used that is similar to GNP is referred to as Gross National Income (GNI). According to the National Economic Development Authority, the country’s GNI has increased by 1.6 percent in 2021. A major contributory factor to the Philippines’ GNI is the remittances coming from the Overseas Filipino Workers (OFW). In accordance with the PSA data in 2020, our OFWs’ total remittances reached Php 134.77 billion.
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Real Estate and Its Contribution to GDP/GNP
The real estate sector including house and lot and condominium units are also part and parcel to the computation of GDP and GNP. According to the PSA report in the first quarter of 2022, the service sector of the Philippine economy continued to expand by 8.6 percent and the subsector of real sector and ownership of houses account for 7.9 percent of the contribution of the sector. Infact, according to the Construction Statistics from Approved Building Permits, Fourth Quarter 2021 of the PSA, the construction of residential units in the country grew by 8.1 percent and valued at around PhP 46.21 billion, accounting for 53.2 percent of the total value.
In this regard, Bria Homes continues to be part of the growth of the real estate industry in the country by being a partner of the Filipinos in achieving their dream home by providing affordable houses and lots and condominium units situated in key strategic places within Metropolitan areas and other provinces. Bria Homes also is in the center of the top three regions in the Philippines where most of the residential units constructions are concentrated namely the National Capital Region, CALABARZON, and Central Luzon. Bria Homes’ headquarter is located in the heart of NCR, Mandaluyong City. While its development projects are available in the provinces of Cavite, Laguna, Batangas, and Rizal for the CALABARZON region and while the provinces of Bataan, Tarlac, Pamapnga, and Bulacan for the Central Luzon region.
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