Why when imports rises, GDP rises and fall when GDP falls?
This may not be always true, the whole economic market has various different factors that may play a role in a nations GDP (Gross Domestic Product). The following example shows how foreign imports may affects a nations GDP.
“U.S. demand for Mexican imports increased.
This increased U.S. demand for pesos.
The increased U.S. demand for pesos raised the price of the peso in dollars.
When Americans purchase more imports from Mexico—holding all else equal—U.S. net exports (and GDP and employment) will decrease.
However, the change in the exchange rate will automatically correct this situation, because a) as the price, in dollars, of Mexican imports rises, U.S. demand for Mexican imports will fall, and b) as the price, in pesos, of U.S. exports to Mexico falls, Mexican demand for U.S. products will rise.
When U.S. exports to Mexico rise (because they are cheaper), it will reverse the trend that began when U.S. demand for Mexican products increased. It will also reverse the effect on U.S. net exports, which will increase when exports to Mexico increase.
The price of the peso in dollars—the dollar-peso
The price of the peso in dollars—the dollar-peso exchange rate—is determined by U.S. demand for Mexican goods and Mexican demand for U.S. goods. However, when the exchange rate changes that affects the price of each country’s goods. That price change affects each country’s demand for the other’s goods in ways that tend to reverse the initial trend.”
http://www.infoplease.com/cig/economics/effect-imports-exports-gdp.html
