What determines GDP

If we were to be simple and crude, my simple understanding of basic economics would suggest that Nominal GDP growth is based on three main drivers:-

1 Population growth and the ratio of young to old workers (i.e. 25 to 50 year olds)

2 Productivity (generally means increasing capital intensity or more innovation from a better educated and better motivated workforce)

3 Inflation: Here we refer to the growth of credit (more savings in an economy more firepower to unleash credit later) and money printing

Hence an economy with large savings, strong productivity increases potential (i..e starting from a relativey low capital intensity and low penetration of highly educated workers) and a steadily growing population with a large proportion of young workers is the ideal combination

We add here a short note on austerity measures. For economies where confidence still remains but has been weakened, austerity can help raise confidence and hence provide access to new capital which can allow new growth to be created. However, generally, in the medium term likely to be problematic, especially if the return of the capital invested is weak.

Austerity in general reduces future deficits, hence reduces the debt level for the future, but does not rsolve the issue of the large debt you currently hold which required the austerity measure to be started.

Large debt burdens are only finally killed by growth, which comes from receiving new capital. Countries where confidence remains need a good plan to attract capital. Those that have no confidence for the market, must eventually restructure debt to attract new capital by offering the potential of large margins (how capitalism works)