How to change the base year of Real GDP?

The real GDP is the inflation-adjusted gross domestic product. It is calculated considering the price level of the base year. The base year lies at the discretion of a statistician or an organization. Central Bureau of Statistics (CBS) calculates real GDP assuming the base year as 2000/01, while the World Bank assumes base year as 2009/2010. 

The rebasing of real GDP is simply the change in the base year. The change in the base year will affect the level value of real GDP but it does not affect the growth rate. 

Assumption

1. The current base year is 2000/01.
2. Rebase real GDP to 2009/10.

Steps in rebasing the real GDP

1. Calculating the GDP deflator at 2000/01.

2. Indexing the GDP deflator with reference to the new base year, that is, 2009/10.

3. Calculating the real GDP considering the new GDP deflator. 

However, the growth rate of real GDP must be constant even after the change in the base year.

Download Excel File

Rebasing the Real GDP (.xlsx)

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For more clarification, watch the video below.