Real Economic Growth Rate
Candlefocus EditorREG is a key economic metric for governments and policy makers. By removing inflation, REG helps to measure the actual economic growth over time and can be used to compare the growth of similar countries with different inflation rates. In other words, REG measures the actual increase in economic output by taking out the impact of inflation on the economy.
REG is typically expressed as a dollar amount or a percentage point and is calculated by comparing the real GDP of one period with the real GDP of the prior period. As such, REG is a comparison between two similar points in time and is used to look at changes in economic performance over time.
REG is a very useful tool in understanding the true economic health of a country. Policymakers use REG to determine the actual economic growth within an economy and to decide how best to support and improve economic development. By removing the effects of inflation, REG-derived figures paint a more accurate portrait of the underlying economic trends in a country and help to detect any underlying problems or opportunities.
Overall, the real economic growth rate is an important metric for understanding economic performance and for making decisions on policy matters. Without REG, economic performance would be weighed down by the effects of inflation and it would be difficult to accurately assess the health and growth of a particular economy. REG thus serves as an important economic indicator for a wide range of analyses, from short term market swings to long-term economic growth for a country.