## Why is GDP the most watched indicator of the global economy?

Gross Domestic Product (GDP) is the primary measure of the economic health of any country. In simple terms, GDP adds up the total value of all goods and services produced within a country's borders over a specific time period. Whether it's cars, clothing, haircuts, or medical services—if it has been purchased, it is included in GDP.

## The three pillars of GDP: Different methods, same result

There are three main approaches to calculating GDP, each offering a different perspective on economic activity.

**The production approach** examines the value of goods and services by production sector. This method shows which sectors of the economy contribute the most to total production.

**The income approach** records the sum of revenues generated—from employee wages to business profits and tax receipts. It reveals how economic value is distributed in society.

**The expenditure approach** aggregates all payments for goods and services, including consumer spending, business investments, and government spending, adding exports and subtracting imports.

## GDP as a thermometer of economic resilience

GDP is not just a number—it is the foundation upon which thousands of rational decisions stand. When GDP is recovering, businesses feel that there is room for expansion and new investments. Conversely, when it shrinks, signs of recession, unemployment, and economic stagnation may appear.

Governments, companies, and investors use GDP data to plan their next moves. This data fuels policy decisions, investment strategies, and secondary planning.

## How GDP Mobilizes Global Financial Markets

The impact of GDP on financial markets is direct and substantial. When GDP strengthens, individuals spend more and businesses earn higher profits. This creates a climate of optimism, which encourages investors to pour capital into stocks, bonds, and even cryptocurrencies.

However, when GDP declines, the landscape changes dramatically. Investors become more conservative, liquidate positions, and withdraw capital from riskier asset classes. This movement exacerbates downward pressure on the prices of cryptocurrencies and securities.

## Connecting the Dots: From GDP to Investment Strategy

Understanding GDP is not a matter of academic curiosity—it's a necessary tool for anyone interested in the dynamics of the global economy. This index determines capital flows, investment trends, and ultimately shapes traditional and digital financial markets, including emerging cryptocurrencies. By achieving a fundamental understanding of GDP and its functioning, you equip yourself with the ability to predict economic movements and act in accordance with market trends.