ECONOMIC ANALYSIS:
In a globalize business environment, the national economy does not remain independent from the rest of the world. The functioning of the global economy has a great impact on the national economy. Therefore the analyst should first begin his analysis with the global economy.
For analyzing the national economic variables one should analyze the economic policies like monetary policy, fiscal policy etc. These policies have a major impact on business directly or indirectly. For example when the rate of interest for housing industry are lowered, the housing industry gets a big boost which in turn boosts the other ancillary industries connected to housing industries.
In Macro economic analysis the following are some of the key economic indicates commonly used to describe the state of macro economy.
- GDP growth rate.
- Industrial growth rate.
- Inflation indices.
- The growth rate of agriculture.
- Savings and investment.
- Government budget and deficit.
- Interest rate Level.
- Balance of payment, Forex reserves, and Exchange rate.
- Infrastructural facilities and arrangements.
- Foreign investment policy.
- Macro economic analysis of other countries (e.g. USA, China, Europe)
The information on the above key indicators along with their forecasts is provided by various recognized agencies from time to rate.
The fundamental analyst, on the basis of information of the above key variables and their forecasts, should judge the impact of these on various industries in general and businesses in particular.
[Read ‘The Economist : Pocket World in Figures ; 2010 Edition]
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