Low GDP, as defined by the World Economic Forum, is a state in which economic growth is below the average of other comparable countries. It can range from a moderate decrease to an extreme decline.
Low GDP is not necessarily a reflection of economic weakness, nor does it mean that the country is poor, although some economists argue that economic conditions can have a negative effect on the quality of life. A low GDP level can also reflect a country's trade surplus, whereas a surplus can be a sign of fiscal health. As most developed economies have a trade deficit, they may not be experiencing low GDP, but their trade surplus is a good indicator of their financial health.
There are many factors that can cause economic conditions to fall into a category of being in the low GDP category. Some of these include:
A country's ability to attract investment has a direct influence on its GDP, so it is important that a country maintains a good level of investment. The investment has the potential to boost the country's exports, but when investment goes into producing goods that are not useful to consumers, it will affect the country's export income. Also, any large deficit in the country's deficit means it is not able to provide a high enough level of income to its citizens to provide sufficient spending power for its citizens.
In addition to investment, a country's ability to attract exports also has an influence on the country's economic growth. Some of the world's best-known goods are produced in countries with strong economies and stable trade relations. For example, high-value items like electronics, computers and pharmaceuticals are manufactured in countries such as Korea and India, where it is easy to find local workers who can do the work and who are paid well enough to make a living wage.
Some other things that can contribute to a country's low GDP level include: lack of a strong educational system; poor infrastructure, such as roads, communication and transport; and a population which is less educated than the rest of the world. In addition, there is also a possibility that a country's low GDP level could reflect its vulnerability to external threats. For example, countries like Iraq and Iran have experienced a steady decline in their economic growth in recent years as a result of political instability.
If a country has low levels of GDP growth, the amount of money the economy produces is greater than the value of all of its assets and there is not enough of the money left over to make payments on debts, interest and taxes. This means that there is not enough money to fund the government.
Low GDP growth is sometimes associated with high unemployment, especially for those workers who have experienced long periods of unemployment in the past. However, most of the time, high unemployment can also be a result of a weak economy. A weak economy is often caused by a recession and falling productivity, so the level of unemployment is generally not directly related to a country's GDP.
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