How To Work Out Real GDP?

Choose the base year (prices from a fixed year)

Compute real GDP using the constant-price (base-year) approach

Select the GDP components to include (typically C + I + G + (X − M))

Convert each spending component to base-year prices

Calculate real GDP as the sum of the base-year-priced components:

Real GDP = C(real) + I(real) + G(real) + (X(real) − M(real))

Alternatively compute real GDP using a deflator approach

Compute nominal GDP (current prices):

Nominal GDP = C(current) + I(current) + G(current) + (X(current) − M(current)

Obtain the GDP deflator (base year = 100)

Convert nominal GDP to real GDP:

Real GDP = Nominal GDP / (GDP deflator / 100)

Ensure units are consistent (same currency, same year basis)

Use the same coverage for GDP (same country, same economic boundary)

Verify the result is for the same time period (annual vs quarterly) and same base year