Relationship Between GVA and GDP

Gross value added (GVA) is the value of output produced minus the value of intermediate goods and services consumed in production. Gross domestic product at market prices (GDP-MP) is obtained by adjusting economy-wide GVA for net taxes on products; both are gross because consumption of fixed capital is not deducted.

Accounting relationship

The relationship is expressed as: GDP at market prices = GVA at basic prices + taxes on products - subsidies on products. Equivalently, GDP-MP equals aggregate GVA plus net taxes on products.

• GVA at basic prices measures the amount accruing to producers from production, excluding taxes and including subsidies linked specifically to products.
• GDP at market prices values domestic production from the market or purchaser-side perspective.
• Subtracting intermediate consumption while calculating GVA prevents double counting across stages of production.

How to interpret the difference

GVA indicates the contribution of individual sectors and is therefore useful for analysing the production side of the economy. GDP-MP is the broader headline aggregate because it includes the government's net product-tax claim on that production.

• GDP growth may differ from aggregate GVA growth when taxes on products or product subsidies change significantly.
• The formula must use product taxes and product subsidies, rather than all government taxes, subsidies or transfers.
• The same conceptual bridge applies to estimates at current prices and constant prices, using consistently valued components.