4 Reasons You MUST Follow Economic Indicators


Cet article a été précédemment publié sur le site Bobby Finance.

Is your country rich, poor or emerging? How do you compare your standard of living to the one in neighbouring regions? What are the most promising business sectors you could work or invest in? How do you identify who will be the next African economic superpowers ten years from now? Which country is worth immigrating to? Which city is worth launching a business in?

The first step to answering all these questions is to understand economic indicators. Growth, GDP, inflation, national debt, unemployment rates, internet and cell phone penetration are all examples of economic indicators that are not only useful to big organisations like the World Bank and the IMF but also to individuals like you and I. Therefore, in this article, I will list 4 reasons why as a professional, entrepreneur or jobseeker, you should follow economic indicators in your country and globally.

1. Economic indicators help you assess the health of a country’s or a region’s economy.

Gross Domestic Product (GDP), debt and unemployment rates are prime examples of this point. The higher the total value of goods and services produced in a country (i.e. GDP), the better the economy, because it means local and foreign consumers are demanding that country’s products. However if GDP drops, notably due to a fall in global consumption, businesses will lose revenue, companies may hire fewer employees to cut costs and the country will earn less money from taxation. Finally, as it frequently happens, government may decide to borrow money and high interest expenses are likely to cause or increase the government budget deficit if the economy does not pick back up quickly. This generally results in government spending cuts on important infrastructure and social programs like education or healthcare.

2. Businesses and financial institutions rely a lot on economic indicators to gage the market.

For example, companies may want to know if people’s purchasing power has increased, which would mean more sales for them. They will also be interested in the cost of hiring new employees, the ideal timing to expand to a new market segment or the impact of an increase in taxes or interest rates.

3. Individuals like you and I need economic indicators mostly to understand and predict how the economy will affect our own well-being.

For example, if a specific industry starts producing more, companies in that sector will tend to hire more people; if the government keeps interest rates low then it may become easier for you to get a loan from a bank; if the general price of goods and services increases (i.e. inflation), you may have to adjust your grocery and leisure budget as a function of that.

4. A government with a prosperous economy will easily attract strategic business partners.

For example: financial institutions will be more prone to lend money to a country with a high GDP, a low inflation rate, a small debt and a decreasing unemployment rate. Similarly, foreign investors will be interested in knowing a country’s economic health in order to decide if it is worth investing in a particular region.

Now that you understand the importance of economic indicators, it’s time to do your part. Indeed, everybody has to contribute to the economy for it to be healthy. Learn how you can participate in your country’s economic development by reading: 5 things you can do to help your country’s economy.

Cet article a été rédigé par Meinna Gwet of BobbyFinance

Meinna Bio : Je suis la fondatrice de Bobbyfinance.com, un site qui éduque les jeunes professionnels et entrepreneurs sur les bases de la finance, de l’économie et des affaires. Afin d’encourager le développement des communautés et de la relève d’affaires, Bobby finance se distingue par une ligne éditoriale axée sur la compréhension du système économique globale et son impact sur l’individu moyen.