GDP is the accurate measure of economy it shows how well or how bad the economy is doing. True said, nothing is perfect in the world there are some shortcomings of GDP which are important to consider in the country economy.
Non-market Transactions
GDP calculate the transactions occurs in the market place other than that its out of its scope, non-market transaction are not occur in the market and no proof is available to make it part of GDP. Suppose, a motor mechanic repair his own car by working whole day, people do the job of gardening by themselves. These type of transaction never counted in the GDP, only the transactions occurs in the market are considered in GDP.
Leisure
In recent years, the working hours are reduced to great extent like in USA in few years weekly working hours reduced from 56 to 36 in addition to this increase in sick leaves, casual leaves, annual leaves, maternity and paternity leaves bring relief in people life. This leisure surely improve the employees performance but unfortunately the leisure is not part of GDP although its quite clear that people are working less and producing more output which shows improvement in productivity and well being of peoples.
Improved Product Quality
GDP is the quantitative measure of product and services rather than qualitative measure, it fails to gauge the quality improvement in the product and services such as computer are available on cheap prices than past but with more processing and storage. This improvement make people happy and satisfied than before because they are getting more on very nominal prices. The quality measure have a great impact on economic well being but again GDP ignores quality attribute entirely.
The Underground Economy
The other aspect of economy which exist in every country with higher percentage in a hidden market. The underground economy is generated from illegal activities such as gambling, smuggling, robbery, prostitution and other. The people involve these type of business have a valid reason to not show their income to the government.
Most people in the underground economy are doing legal activities but choose not to report their income to Government. The person receiving unemployment compensation benefits may take an “off- the-books” or “cash-only job”. A person give tuition to neighbor kids on behalf of free car repairing services for kids father.