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Data are from Bank of Canada from 2018-2019-03, converted using US Dollar as base. The major factors influencing the movement of foreign exchange rates are (1) Interest Rate Differential with the U.S.A., (2) inflation rate and (3) the the strength of the economy.

HOW TO INTERPRET GDP CHANGES?

 Similar to a society which is a collection of individuals, our world is divided into "countries".  For individuals, more often than not we compare them by wealth or income.   Is wealth or income really important?  To some yes, but to others, no.  Some believes in a meaning life is more important.  But the problem is that, it is hard to measure meaning of life.  It is much easier to measure income, which is taxable.  Even for wealth, it is not a good measure because wealth does not always generate income.  For instance if you possess lots of gold, there is no income even though you are wealthy. 

 

Similarly from a country's perspective, it makes sense to define a measure that can be compared across time and space, which forms the basis of GDP.

GDP is a measure that is easy to interpret, but it was not created to be the ultimate meaning of life.  Some countries, such as Burma, used a measure of happiness to measure  success.  GDP is used so extensively because it aggregates all economics activities in a number for a given year in a standard way so you can compare the same number over time and with other countries.  But that is no different from using population as another success indicators, which is even more straight forward and serves the same purpose of comparison over time and space. 

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