Tonga has a GDP of $679M compared to $57.5B for Tunisia, ranking 191/197 and 93/197 by economy size, respectively.
Tonga has $186M in government debt (27.4% of GDP), compared to $46.7B (81.3% of GDP) in Tunisia.
Tonga vs Tunisia GDP by year
| Year | GDP, current $ | |
|---|---|---|
Tonga
|
Tunisia
|
|
| 2025 | $679,218,219 | $57,502,836,548 |
| 2024 | $647,488,244 | $51,412,122,480 |
| 2023 | $591,139,734 | $48,205,328,303 |
| 2022 | $556,514,556 | $44,929,920,093 |
| 2021 | $519,306,339 | $47,073,234,359 |
| 2020 | $506,571,487 | $42,491,780,918 |
| 2019 | $506,031,248 | $41,905,642,419 |
| 2018 | $493,530,767 | $42,686,504,460 |
| 2017 | $459,976,847 | $42,163,530,591 |
| 2016 | $420,828,255 | $44,360,072,680 |
| 2015 | $437,525,539 | $45,779,494,042 |
| 2014 | $440,997,735 | $50,271,812,921 |
| 2013 | $451,788,498 | $48,685,446,414 |
| 2012 | $471,122,971 | $47,311,401,813 |
| 2011 | $414,143,828 | $48,123,325,825 |
| 2010 | $366,887,375 | $46,206,091,938 |
| 2009 | $312,415,028 | $43,455,740,497 |
| 2008 | $344,438,844 | $44,859,439,902 |
| 2007 | $298,519,623 | $38,915,353,867 |
| 2006 | $292,232,703 | $34,376,664,601 |
| 2005 | $261,823,805 | $32,272,186,695 |
| 2004 | $230,678,011 | $31,183,885,241 |
| 2003 | $202,246,591 | $27,453,902,261 |
| 2002 | $182,764,281 | $23,141,616,605 |
| 2001 | $181,117,230 | $22,065,832,449 |
| 2000 | $204,848,488 | $21,473,528,161 |
| 1999 | $199,208,718 | $22,943,202,175 |
| 1998 | $191,504,893 | $21,802,893,587 |
| 1997 | $214,991,452 | $20,746,210,354 |
| 1996 | $222,100,576 | $19,587,161,807 |
| 1995 | $208,871,666 | $18,030,876,599 |
| 1994 | $195,990,986 | $15,633,174,304 |
| 1993 | $138,489,884 | $14,608,335,608 |
| 1992 | $137,066,291 | $15,496,708,060 |
| 1991 | $132,201,141 | $13,074,782,609 |
| 1990 | $113,563,822 | $12,290,568,182 |
| 1989 | $106,344,855 | $10,101,851,745 |
| 1988 | $106,657,267 | $10,096,245,762 |
| 1987 | $81,667,133 | $9,696,715,911 |
| 1986 | $68,195,856 | $9,017,806,654 |
| 1985 | $60,058,663 | $8,410,226,053 |
| 1984 | $64,248,355 | $8,254,541,195 |
| 1983 | $60,863,964 | $8,350,582,748 |
| 1982 | $62,068,161 | $8,133,580,052 |
| 1981 | $62,242,013 | $8,428,445,294 |
| 1980 | $53,260,077 | $8,744,134,354 |
| 1979 | $44,667,002 | $7,188,863,904 |
| 1978 | $41,567,472 | $5,968,460,080 |
| 1977 | $34,139,388 | $5,109,324,009 |
| 1976 | $30,036,417 | $4,508,191,942 |
| 1975 | $32,506,742 | $4,328,965,588 |
| 1974 | - | $3,545,868,575 |
| 1973 | - | $2,730,813,385 |
| 1972 | - | $2,237,556,149 |
| 1971 | - | $1,685,162,272 |
| 1970 | - | $1,439,238,095 |
| 1969 | - | $1,289,904,762 |
| 1968 | - | $1,214,666,667 |
| 1967 | - | $1,085,714,286 |
| 1966 | - | $1,040,952,381 |
| 1965 | - | $991,047,619 |
| 1964 | - | $1,025,866,792 |
| 1963 | - | $1,026,737,600 |
| 1962 | - | $880,027,733 |
| 1961 | - | $866,155,429 |
Data sources: World Bank | Economy & Growth (1961–2025, retrieved 2026-07-08).
GeoRank.org/economy/tonga/tunisia | CC BY 
GDP per capita in Tonga vs Tunisia by year
| Year | Current $ | |||
|---|---|---|---|---|
|
Tonga
|
Tunisia
|
|||
| GDP per capita | GDP per capita, PPP | GDP per capita | GDP per capita, PPP | |
| 2025 | $6,547 | - | $4,657 | - |
| 2024 | $6,215 | - | $4,188 | $14,521 |
| 2023 | $5,652 | $7,803 | $3,951 | $14,041 |
| 2022 | $5,298 | $7,296 | $3,707 | $13,619 |
| 2021 | $4,923 | $6,929 | $3,907 | $12,444 |
| 2020 | $4,792 | $6,676 | $3,549 | $11,918 |
| 2019 | $4,789 | $6,473 | $3,529 | $12,495 |
| 2018 | $4,675 | $6,393 | $3,628 | $11,841 |
| 2017 | $4,366 | $6,229 | $3,619 | $11,289 |
| 2016 | $3,988 | $5,920 | $3,848 | $10,994 |
| 2015 | $4,124 | $5,472 | $4,015 | $10,783 |
| 2014 | $4,137 | $5,336 | $4,459 | $10,947 |
| 2013 | $4,219 | $5,120 | $4,370 | $10,672 |
| 2012 | $4,384 | $4,996 | $4,297 | $10,615 |
| 2011 | $3,850 | $4,855 | $4,421 | $10,436 |
| 2010 | $3,416 | $4,465 | $4,292 | $10,555 |
| 2009 | $2,914 | $4,384 | $4,080 | $10,237 |
| 2008 | $3,218 | $4,600 | $4,255 | $9,975 |
| 2007 | $2,797 | $4,316 | $3,727 | $9,479 |
| 2006 | $2,750 | $4,327 | $3,323 | $8,729 |
| 2005 | $2,478 | $4,315 | $3,147 | $8,117 |
| 2004 | $2,195 | $4,235 | $3,067 | $7,672 |
| 2003 | $1,936 | $4,231 | $2,726 | $7,098 |
| 2002 | $1,759 | $4,171 | $2,321 | $6,715 |
| 2001 | $1,754 | $3,955 | $2,236 | $6,593 |
| 2000 | $1,995 | $3,834 | $2,199 | $6,279 |
| 1999 | $1,952 | $3,636 | $2,376 | $5,930 |
| 1998 | $1,889 | $3,527 | $2,285 | $5,579 |
| 1997 | $2,136 | $3,434 | $2,202 | $5,333 |
| 1996 | $2,215 | $3,410 | $2,107 | $5,040 |
| 1995 | $2,084 | $3,347 | $1,968 | $4,686 |
| 1994 | $1,957 | $3,088 | $1,733 | $4,555 |
| 1993 | $1,383 | $2,882 | $1,649 | $4,401 |
| 1992 | $1,370 | $2,716 | $1,785 | $4,292 |
| 1991 | $1,323 | $2,652 | $1,538 | $3,975 |
| 1990 | $1,139 | $2,416 | $1,476 | $3,780 |
| 1989 | $1,070 | - | $1,239 | - |
| 1988 | $1,078 | - | $1,266 | - |
| 1987 | $830 | - | $1,245 | - |
| 1986 | $696 | - | $1,187 | - |
| 1985 | $613 | - | $1,135 | - |
| 1984 | $656 | - | $1,143 | - |
| 1983 | $621 | - | $1,184 | - |
| 1982 | $633 | - | $1,177 | - |
| 1981 | $636 | - | $1,247 | - |
| 1980 | $545 | - | $1,324 | - |
| 1979 | $458 | - | $1,113 | - |
| 1978 | $428 | - | $946 | - |
| 1977 | $353 | - | $830 | - |
| 1976 | $315 | - | $752 | - |
| 1975 | $349 | - | $741 | - |
| 1974 | - | - | $624 | - |
| 1973 | - | - | $493 | - |
| 1972 | - | - | $415 | - |
| 1971 | - | - | $320 | - |
| 1970 | - | - | $280.5 | - |
| 1969 | - | - | $257.7 | - |
| 1968 | - | - | $248.9 | - |
| 1967 | - | - | $228 | - |
| 1966 | - | - | $223.8 | - |
| 1965 | - | - | $217.3 | - |
| 1964 | - | - | $228.5 | - |
| 1963 | - | - | $231.9 | - |
| 1962 | - | - | $201.4 | - |
| 1961 | - | - | $200.7 | - |
Data sources: World Bank | Economy & Growth (1961–2025, retrieved 2026-07-08).
GeoRank.org/economy/tonga/tunisia | CC BY
Tonga's GDP per capita is $6,547, ranking 110/197, compared to $4,657 in Tunisia, ranking 127/197. Adjusted for purchasing power (GDP per capita PPP), Tonga ranks 144th at $7,803, while Tunisia ranks 114th at $14,521.
Economic indicators
|
Tonga
|
Tunisia
|
|
|---|---|---|
| Gross domestic product |
$679M
2025 |
$57.5B
2025 |
| GDP rank |
191/197
2025 |
93/197
2025 |
| GDP growth |
2.8%
2024-2025 |
2.49%
2024-2025 |
| GDP per capita |
$6,547
2025 |
$4,657
2025 |
| GDP per capita rank |
110/197
2025 |
127/197
2025 |
| GDP per capita, PPP |
$7,803
2023 |
$14,521
2024 |
| GDP per capita PPP rank |
144/197
2023 |
114/197
2024 |
| Government debt |
$186M
2025 |
$46.7B
2025 |
| Debt-to-GDP ratio |
27.4%
2025 |
81.3%
2025 |
| Government debt per person |
$1,793
2025 |
$3,785
2025 |
| Government debt per person rank |
123/185
2025 |
95/185
2025 |
| Average annual personal income after taxes |
$4,104
2026 |
$4,193
2026 |
| Market capitalization of domestic companies | n/a |
$12B
2025 |
| Income share by richest 10% |
22%
2021 |
27%
2021 |
| Income share by poorest 10% |
4%
2021 |
3.1%
2021 |
| Government expenditure, % of GDP |
46.8%
2025 |
34%
2025 |
| Consumer prices inflation |
5.59%
2024-2025 |
5.3%
2024-2025 |
| Central bank interest rate | n/a |
7.5%
2025 |
| Unemployment rate |
1.65%
2023 |
15.1%
2023 |
| Population |
103283
|
12450912
|
Spending and national debt comparison by year
| Year | % of GDP | |||
|---|---|---|---|---|
|
Tonga
|
Tunisia
|
|||
| Government spending | Government debt | Government spending | Government debt | |
| 2025 | 46.8% | 27.4% | 34% | 81.3% |
| 2024 | 44.3% | 31.9% | 35.8% | 85.7% |
| 2023 | 41.5% | 37.2% | 35.9% | 84% |
| 2022 | 41.3% | 40.2% | 36.6% | 83% |
| 2021 | 44.5% | 43% | 33.4% | 79.7% |
| 2020 | 37.1% | 41.7% | 34.5% | 77.7% |
| 2019 | 39% | 41.8% | 29.5% | 67.3% |
| 2018 | 39.3% | 45.5% | 28.7% | 72.9% |
| 2017 | 39.7% | 44.7% | 28.7% | 67.1% |
| 2016 | 37.2% | 49.4% | 27.2% | 58.9% |
| 2015 | 37.4% | 51.1% | 27.4% | 52.4% |
| 2014 | 31.5% | 47.4% | 27.7% | 50.7% |
| 2013 | 34.3% | 48.9% | 30.8% | 45.6% |
| 2012 | 32% | 60% | 28.3% | 49% |
| 2011 | 32.6% | 51.9% | 27.9% | 43.3% |
| 2010 | 28.4% | 44.7% | 24% | 38.8% |
| 2009 | 23.9% | 39.7% | 24.6% | 40.3% |
| 2008 | 24% | 34% | 23.7% | 41.4% |
| 2007 | 23.2% | 37.8% | 23.3% | 42.7% |
| 2006 | 25.6% | 39.6% | 22.9% | 45.7% |
| 2005 | 19.8% | 43.3% | 23% | 50% |
| 2004 | 19.3% | 52.2% | 23% | 51.6% |
| 2003 | 20% | 56.2% | 23.5% | 52.6% |
| 2002 | 21.3% | 60.7% | 24.1% | 51.6% |
| 2001 | 19.1% | 53.4% | 24% | 52.2% |
| 2000 | 20% | 43.6% | 24% | 62.9% |
| 1999 | 18.8% | 38.4% | 24% | 61.9% |
| 1998 | - | - | 24.2% | 58.2% |
| 1997 | - | - | 24.5% | 66.6% |
| 1996 | - | - | 26.7% | 66.8% |
| 1995 | - | - | 26.6% | 65.6% |
| 1994 | - | - | 25.9% | 63.9% |
| 1993 | - | - | 26.7% | 63.8% |
| 1992 | - | - | 25.7% | 62.1% |
| 1991 | - | - | 27.6% | 63.3% |
Data sources: International Monetary Fund (IMF) | Fiscal Monitor (1991–2025, retrieved 2026-07-08).
GeoRank.org/economy/tonga/tunisia | CC BY
In 2025, Tonga's government spending was $318M, accounting for 46.8% of its GDP, while Tunisia spent $19.6B, or 34% of GDP.
Debt-to-GDP ratio is 27.4% in Tonga and 81.3% in Tunisia, ranking 162/185 and 40/185, respectively.
Government deficit by year
| Year | Deficit/surplus, % of GDP | |
|---|---|---|
|
Tonga
|
Tunisia
|
|
| 2025 | 4.86% | -5.24% |
| 2024 | 3.6% | -6.36% |
| 2023 | 5.28% | -7.27% |
| 2022 | -0.09% | -7% |
| 2021 | -0.87% | -7.81% |
| 2020 | 5.15% | -9.06% |
| 2019 | 3.2% | -3.6% |
| 2018 | 2.9% | -4.27% |
| 2017 | 3.58% | -5.61% |
| 2016 | 1.47% | -5.87% |
| 2015 | -2.75% | -4.95% |
| 2014 | 6.38% | -3.11% |
| 2013 | -1.3% | -7.05% |
| 2012 | -1.74% | -4.9% |
| 2011 | -6.02% | -3.19% |
| 2010 | -1.22% | -0.46% |
| 2009 | 6.85% | -2.59% |
| 2008 | 2.14% | -0.62% |
| 2007 | 5.39% | -2.47% |
| 2006 | 1.34% | -2.33% |
| 2005 | 4.23% | -2.59% |
| 2004 | 4.23% | -2.1% |
| 2003 | 2.37% | -2.64% |
| 2002 | 2.59% | -2.55% |
| 2001 | 2.23% | -2.87% |
| 2000 | 1.35% | -3.22% |
| 1999 | 1.55% | -3.05% |
| 1998 | - | -2.84% |
| 1997 | - | -3.7% |
| 1996 | - | -5.18% |
| 1995 | - | -4.53% |
| 1994 | - | -2.87% |
| 1993 | - | -3.22% |
| 1992 | - | -3.45% |
| 1991 | - | -5.25% |
Data sources: International Monetary Fund (IMF) | Fiscal Monitor (1991–2025, retrieved 2026-07-08).
GeoRank.org/economy/tonga/tunisia | CC BY
In 2025, Tonga's government surplus, the difference between spending and revenue, was $33M, equivalent to 4.86% of GDP. This compares to Tunisia's deficit of $3.01B, or 5.24% of GDP.
Over the past 27 years, Tonga recorded a fiscal deficit in 7 of those years, while Tunisia ran a deficit in 27 years. On average, Tonga posted an annual surplus equal to 2.1% of GDP, compared to deficit of 4.18% of GDP for Tunisia.
Inflation comparison by year
| Year | Consumer prices inflation | |
|---|---|---|
|
Tonga
|
Tunisia
|
|
| 2025 | 5.59% | 5.3% |
| 2024 | 3.18% | 7% |
| 2023 | 6.35% | 9.3% |
| 2022 | 11% | 8.3% |
| 2021 | 5.64% | 5.7% |
| 2020 | -0.35% | 5.6% |
| 2019 | 1.18% | 6.7% |
| 2018 | 5.03% | 7.3% |
| 2017 | 7.52% | 5.3% |
| 2016 | 2.58% | 3.6% |
| 2015 | -1.05% | 4.4% |
| 2014 | 2.51% | 4.6% |
| 2013 | 0.78% | 5.4% |
| 2012 | 1.15% | 4.6% |
| 2011 | 6.27% | 3.2% |
| 2010 | 3.53% | 4.4% |
| 2009 | 1.43% | 3.5% |
| 2008 | 10.4% | 4.9% |
| 2007 | 5.84% | 3.4% |
| 2006 | 6.15% | 4.1% |
| 2005 | 8.67% | 1.9% |
| 2004 | 11% | 3.7% |
| 2003 | 11.6% | 2.7% |
| 2002 | 10.4% | 2.7% |
| 2001 | 8.29% | 1.9% |
| 2000 | 6.33% | 2.8% |
| 1999 | 4.46% | 2.8% |
| 1998 | 3.27% | 3.1% |
| 1997 | 2.12% | 3.6% |
Data sources: International Monetary Fund (IMF) | World Economic Outlook (1997–2025, retrieved 2026-07-08); World Bank | Economy & Growth (1997–2025, retrieved 2026-07-08).
GeoRank.org/economy/tonga/tunisia | CC BY
Over the past 29 years, Tonga has recorded an average annual inflation rate of 5.2%, compared with 4.54% in Tunisia. In 2025, inflation was 5.59% in Tonga and 5.3% in Tunisia.
Balance of trade
|
Tonga
|
Tunisia
|
|
|---|---|---|
|
Current account balance
|
-$43.5M
2024 |
-$775M
2024 |
| Current account balance ranking |
76/190
2024 |
111/190
2024 |
| Current account balance, % of GDP |
-6.72%
2024 |
-1.51%
2024 |
| Goods imports |
$232M
2024 |
$18.7B
2024 |
| Goods exports |
$10.8M
2024 |
$8.95B
2024 |
| Service imports |
$161M
2024 |
$3.92B
2024 |
| Service exports |
$93.6M
2024 |
$11.2B
2024 |
| Imports of goods and services, % of GDP |
60.7%
2024 |
54.8%
2025 |
| Exports of goods and services, % of GDP |
16.9%
2024 |
46.7%
2025 |
Economic freedom indices
The indices of economic freedom below are issued by the Heritage Foundation. Higher scores indicate stronger economic health.
|
Tonga
|
Tunisia
|
|
|---|---|---|
| Economic freedom | 58.9 | 48.1 |
| Economic freedom ranking | 107/197 | 172/197 |
| Property rights | 71.1 | 55.7 |
| Government integrity | 45.1 | 42.1 |
| Judicial effectiveness | 64.9 | 39.7 |
| Tax burden | 85.6 | 68.5 |
| Government spending | 31 | 62.5 |
| Fiscal health | 97.3 | 16 |
| Business freedom | 59.2 | 59.4 |
| Labor freedom | 55.9 | 55.8 |
| Monetary freedom | 61 | 72.4 |
| Trade freedom | 75.4 | 54.6 |
| Investment freedom | 40 | 20 |
| Financial freedom | 20 | 30 |
Economic freedom comparison by year
| Year | Economic freedom index | |
|---|---|---|
|
Tonga
|
Tunisia
|
|
| 2026 | 58.9 | 48.1 |
| 2025 | 58.5 | 49.1 |
| 2024 | 59.2 | 48.8 |
| 2023 | 60 | 52.9 |
| 2022 | 60.8 | 54.2 |
| 2021 | 57.5 | 56.6 |
| 2020 | 58.8 | 55.8 |
| 2019 | 57.7 | 55.4 |
| 2018 | 63.1 | 58.9 |
| 2017 | 63 | 55.7 |
| 2016 | 59.6 | 57.6 |
| 2015 | 59.3 | 57.7 |
| 2014 | 58.2 | 57.3 |
| 2013 | 56 | 57 |
| 2012 | 57 | 58.6 |
| 2011 | 55.8 | 58.5 |
| 2010 | 53.4 | 58.9 |
| 2009 | 54.1 | 58 |
| 2008 | - | 60.1 |
| 2007 | - | 60.3 |
| 2006 | - | 57.5 |
| 2005 | - | 55.4 |
| 2004 | - | 58.4 |
| 2003 | - | 58.1 |
| 2002 | - | 60.2 |
| 2001 | - | 60.8 |
| 2000 | - | 61.3 |
| 1999 | - | 61.1 |
| 1998 | - | 63.9 |
| 1997 | - | 63.8 |
| 1996 | - | 63.9 |
| 1995 | - | 63.4 |
Data sources: The Heritage Foundation | Economic Freedom Index (1995–2026, retrieved 2026-07-08).
GeoRank.org/economy/tonga/tunisia | CC BY
The Economic Freedom Index for Tonga is 58.9, ranking 107/197, compared to 48.1 for Tunisia, ranking 172/197. The chart above displays a comparison of annual changes in economic freedom indexes.
Other economic metrics
|
Tonga
|
Tunisia
|
|
|---|---|---|
| Services, % of GDP |
49.5%
2024 |
62.7%
2025 |
| Industry, % of GDP |
17.7%
2024 |
22%
2025 |
| Agriculture, forestry, and fishing, % of GDP |
18.6%
2024 |
10.3%
2025 |
|
GNI, Atlas method
|
$709M
2025 |
$53B
2025 |
| GNI per capita, PPP |
$9,240
2025 |
$14,870
2025 |
| Total reserves including gold |
$413M
2025 |
$9.34B
2024 |
| Total reserves ranking |
162/177
2025 |
84/177
2024 |
|
Net foreign direct investment
|
$13.3M
2024 |
-$725M
2024 |
|
Net inflows of foreign direct investment
|
-$12.1M
2024 |
$760M
2024 |
|
Net outflows of foreign direct investment
|
$1.25M
2024 |
$34.6M
2024 |
|
Servicing debt to the IMF, % of GNI
|
6.33%
2024 |
10.9%
2024 |
| Poverty at national poverty lines |
20.6%
2021 |
16.6%
2021 |
|
Gross capital formation, % of GDP
|
26.4%
2024 |
15.2%
2025 |
GDP per capita map
Data sources: World Bank | Economy & Growth (1985–2025, retrieved 2026-07-08); U.S. Census Bureau (1985–2025, retrieved 2026-07-08).
GeoRank.org/economy/tonga/tunisia | CC BY
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Data sources:
- World Bank | Economy & Growth (1961–2025, retrieved 2026-07-08)
- International Monetary Fund (IMF) | Fiscal Monitor (1991–2025, retrieved 2026-07-08)
- The Heritage Foundation | Economic Freedom Index (1995–2026, retrieved 2026-07-08)
- U.S. Census Bureau (1985–2025, retrieved 2026-07-08)
- United Nations | World Population Prospects (2026, retrieved 2026-07-08)
- LivingCost (2026, retrieved 2026-07-08)
Creative Commons Attribution (CC BY) — you’re free to copy, share, remix, adapt, and use even commercially as long as you give appropriate credit and clearly indicate if you made changes. Other sources may be subject to different license terms.
The current account balance is the sum of net trade in goods and services, net earnings from cross-border investments, and net transfer payments. It reflects a country's economic transactions with the rest of the world and is a fundamental component of the balance of payments. A surplus indicates that a country exports more than it imports, while a deficit shows the opposite.
Gross National Income (GNI) measures a country's total income. It encompasses income earned by residents, businesses, and foreign sources, defined as employee compensation and investment profits. GNI adds product taxes not included elsewhere and subtracts subsidies. It accounts for income from residents working abroad but excludes earnings from foreigners within the country.
A negative value for Net Foreign Direct Investment indicates a country is a net receiver of investments, as foreign inflows exceed outflows after Balance of Payments adjustments. A positive value indicates a net provider, with outflows exceeding inflows. Inflows are credits (increasing foreign claims on domestic assets), while outflows are debits (increasing domestic assets abroad).
Foreign direct investment (FDI, net inflows) shows how much capital foreign investors bring into a country after accounting for any funds that flow back in the opposite direction. It represents the net value of overseas companies establishing, expanding, or financing businesses in the reporting country. A positive number means more capital entered the country than was withdrawn, while a negative number means foreign investors pulled out more than they invested.
Foreign direct investment (FDI, net outflows) shows how much capital residents of a country invest abroad after accounting for any funds that flow back in the opposite direction. It represents the net value of domestic companies establishing, expanding, or financing businesses in other countries. A positive number means more capital was invested abroad than withdrawn, while a negative number means residents pulled back more than they invested.
Principal and interest payments to the IMF in currency, goods, or services on long-term debt expressed as a share of GNI.
Formerly gross domestic investment, gross capital formation measures the share of a country’s economic output invested in fixed assets, including buildings, machinery, and infrastructure. It indicates how much of the economy is devoted to building productive capacity.