How does the GDP tell us about the health and growth of the economy?

GDP (Gross Domestic Product) is a measure of economic or commercial goods and services produced in an economy. This measure is a fairly good indicator of the total size of the economy, just as the total turnover of a company is a fairly good measure of size of the company. However neither GDP is a perfect measure of the size of an economy nor total turnover a perfect measure of size of a company.

However if we accept GDP as a fairly good measure of an economy's size, changes in GDP over a period can be used as a measure of growth of an economy, and this measure of economic growth can be used as an indicator of changes in health of the economy.

The GDP is not a true measure of either size or health for two main reasons. First, GDP does not take into account non-commercial goods and services produced in an economy. Second, GDP does not take into account the population economy. For example, China is ranked, in terms of GDP, as one of the biggest economy in the world ahead of many highly developed but smaller countries. But when we look at the average prosperity of a Chinese citizen, we find that it is ranked much lower.