GDP Versus GNP as Economic Growth Indicator (Business Brief No.3608)

Recently, it was proposed that the gross national product (GNP) – as an economic growth indicator – be monitored concurrently with our gross domestic product (GDP). One of the advantages of using GNP as an economic growth indicator is that it takes into account national income generated abroad. While GDP reflects the aggregate value of final products and services “produced in the country” by any nationality, GNP specifically measures the value of final goods and services “produced by the citizens of a country” residing in that country or aboard. Therefore, the GNP could be higher (or lower) than the GDP, depending on income earned by a country's citizens abroad, e.g., in the forms of wages and returns on investments, versus income generated in the country by foreign nationals.

In the case of Thailand and other AEC member states, e.g., Singapore, Indonesia and Malaysia, their GNP has invariably been lower than GDP because their economies are much driven by foreign investment; therefore, they incur higher expense from investment privileges and remuneration to foreign nationals than their income abroad.

Thailand's GNP growth has eclipsed our GDP growth for two years. Our GNP advanced 2.2 percent in 2014 and 3.6 percent in 2015, whereas our GDP expanded only 0.8 percent in 2014 and 2.8 percent in 2015, reflecting that Thailand's income abroad is on the rise. Given this, GNP and GDP can both be used to analyze and assess overall Thai economic performance since they offer a broader view, when used together, as well as a greater understanding of the connectivity between domestic and foreign activities. In addition, it is imperative that we disseminate such economic growth indicators soon so that they can be used to assess the Thai economic outlook in a timely manner.