Economic growth is the overall growth of an economy. Gross national product and gross domestic product are the standard measures of economic growth. Because growth can take many forms, GNP and GDP are not particularly effective measures. Even more, economic growth can result from more people in an economy. If economic growth is slower than population growth, there may be economic growth, but the average person is less well off. As economic growth is measured as the annual percentage change in national income, it has all the advantages and disadvantages of this level variable. There are two types of economic growth, REAL and POTENTIAL. We must recognize the difference between actual and potential economic growth. Real growth: This is the percentage annual increase in national production and is also known as “GDP” (gross domestic production). This is said to be the growth rate of real output produced. GDP growth rate statistics refer to real growth when published. This is a table of GDP growth rates for the last 10 years. I have included a few countries, including the United Kingdom: Year United Kingdom Italy Netherlands Belgium Switzerland Sweden Australia New Zealand 2005 - 0.16 0.94 1.16 - 2.47 2.46 -2004 3, 08 1.22 1.72 2.59 2.07 3.74 3.55 3.48 2003 2.20 0.25 -0.13 0.91 -0 0.27 1.69 3.07 3.882002 1.77 0.38 0.08 1.50 0.31 2.00 4.13 4.462001 2.30 1.76 23.31 1.05 1.04 1.07 2.24 3.782000 3, 86 3.58 3.47 3.86 3.61 4.33 3.33 2.481999 2.80 1.65 5.27 10.39 1.31 -1.04 4.32 5.161998 3.12 1.81 3.09 2.08 2.79 3.65 5.30 1.001997 3.29 2.03 3.83 3.88 1.91 2.44 3.86 1996 2.69 1.09 3 .05 0.85 0.52 1.29 4.32 3.231995 2.84 2.92 3.03 2.29 0.38 4.05 3.49 3.74Source: http://investintaiwan.nat. gov.tw/en/env/stats/gdp_growth.htmlPotential growth: This is how quickly the economy could grow. This is the annual percentage increase in the production capacity of an economy. The main factors that can contribute to potential economic growth include:- An increase in resources – natural, labor or capital. An increase in the potential with which these resources can be exploited. used, thanks to technological progress, improved professional skills or better organization. Real growth will tend to rise and fall. In some years the growth rate can be high; This is when the country will experience what we call a “boom”. Other years, growth is simply weak or negative; this is when the country is in recession, a period of “recession” or “depression”. This series of expansions and recessions is commonly referred to as the business cycle. There are four “phases” in the economic cycle:1. Recovery – During this phase, a contracting or inactive economy begins to improve and real output growth resumes.2. Expansion – In this stage, there is rapid economic growth: the economy is booming. Resources are widely used and the bridge between actual and potential production is narrowing.3. The Climax – Throughout this phase, growth slows and may even stop.4. Slowdown, recession or crisis – During this period, there is little or no growth and even a decline in production.