Its Really difficult to take a sneak peak into a country’s economic situations without the pre-requisite knowledge.The global phenomenon of Internet comes handy to decode this scenario,but to a limited extent.The fast changing global financial markets comprising of different countries offer a wide spectrum of investment oppurtunities,giving the investors numerous options to choose from.
Hence,the prospective investors need to identify and adhere to certain parameters to analyse a country’s economy based on the trend.These parameters provide the users a comprehensive tool to understand and follow the economic conditions of different nations.They consequently help them to streamline there investments accordingly.
Here are some Important ones:
1. 1.Inflation rate: Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of the currency is falling. Central banks attempt to limit inflation and avoid deflation, in order to keep the economy running smoothly.
How to Calculate Inflation
2. GDP growth: The gross domestic product (GDP) is one of the primary indicators used to gauge the health of a country’s economy. It represents the total currency value of all goods and services produced by the country over a specific time period.How to calculate GDP
3. Current Account Deficit: Current account deficit is a measurement of a country’s trade where the value of the goods and services it imports exceeds the value of the goods and services it exports. The current account also includes net income, such as interest and dividends, as well as transfers, such as foreign aid.
How to calculate current account Deficit
4. Foreign Exchange Reserves: Foreign-exchange reserves (also called forex reserves or FX reserves) is money or other assets held by a central bank or other monetary authority so that it can pay if need be its liabilities, such as the currency issued by the central bank, as well as the various bank reserves deposited with the central bank by the government and other financial institutions. Reserves are held in one or more reserve currency, mostly the United States dollar and to a lesser extent the EU’s euro, the British pound sterling, and the Japanese yen
5. Fiscal Deficit: Fiscal deficit is the difference between the government’s expenditures and its revenues (excluding the money it’s borrowed). A country’s fiscal deficit is usually communicated as a percentage of its gross domestic product (GDP).
There are four kinds deficit
· Budgetary deficit
· Fiscal deficit
· Revenue deficit
· Primary deficit