But at the same time,we have found that our country's GDP in the first quarter of last year was $4.25 trillion,and it decreased to $4.16 trillion in the first quarter of this year,a decrease of $90 billion year-on-year.

On one hand,there is a growth rate of 4.5%,on the other hand,there is a decrease of 90 billion in value.Has our GDP increased or decreased?

In fact,if we look at more GDP data from other countries,we will find that GDP is quite confusing.

You might not imagine that Russia's GDP increased last year under such bad conditions,and you might not imagine that the United States,which is on the verge of recession,can actually have an outstanding GDP.

Let's analyze it carefully.

01,Increase or Decrease?

Firstly,according to the calculation in RMB,our country's GDP did indeed increase significantly,and even after deducting the price factors,it still increased by 4.5% compared to last year.

Moreover,our country's foreign trade exports in March increased greatly,which exceeded the predictions of our country at that time.

A while ago,some Western economists analyzed the economic situation of Europe and America and believed that China's exports would be affected by the consumption capacity of Europe and America,and China's export trade would decrease.

But in fact,China's exports are not only to Europe and America but also to many countries such as Russia,Southeast Asia,and Africa.This year,the export volume to these countries has increased significantly,offsetting the decreased export volume to Europe and America.So,the actual outcome is that our country's total import and export volume had already increased by 15% by March.

However,why is it said that this year's Q1 GDP decreased by $90 billion?

The GDP mentioned here is the reduction after being converted into US dollars.

It increased when calculated in RMB,but decreased when calculated in US dollars,which is only possible if the RMB suffered a significant loss when converted into US dollars,due to the average exchange rate for this year's Q1 falling by more than 7% compared to last year's Q1.

The exchange rate loss of 7% is greater than the GDP growth rate,so it decreased by $90 billion after being converted into US dollars.

02,Exchange rate impact

From here,we can also see that the exchange rate has a significant impact on GDP calculated in US dollars.

The situation in Russia is also like this.

Although Russia's GDP decreased by 2.1% in 2022,due to inflation and the rise in exchange rates,Russia's GDP data is still growing when calculated in US dollars,

Therefore,if the ruble continues to depreciate,Russia's GDP will decrease significantly,but it seems that the US dollar has fallen more this year,and there are signs of recovery in Russia's economy,so it is highly likely that Russia's GDP converted into US dollars will increase significantly in 2023.Why does the GDP of every country eventually turn into US dollars?

The US dollar,as the world's most important currency,holds the largest share globally and has a significant position in the world.Therefore,it is customary to convert GDP into US dollars for comparisons between different countries.

03.Purchasing Power GDP

Is it because of the US dollar exchange rate that the GDP gap between China and the United States is getting larger and larger?

Yes,but not entirely.

Last year's US GDP report showed an increase of $2.5 trillion over the course of a year,nearly a 10% increase,but 7 percentage points of that came from rising prices.

In contrast,China's price increase last year was only 2%,which is less than one-third of that in the United States.

Therefore,rising prices are the biggest source of inflation in the US GDP.

If we squeeze out the inflation,and calculate the GDP of countries based on purchasing power,China actually surpassed the United States to become the world's number one in 2016.

Currently,when calculating GDP based on purchasing power parity,China is still number one,the United States is second,India has surpassed to become third,and Japan and Germany have been pushed to fourth and fifth places.Only by comparing from this perspective can it be more authentic.