Macroeconomic indicators and their importance to performance

The Company that you work for is presently runing in three states – Chile, Columbia and Venezuela – for which it has collected the macroeconomic informations given below. Write a study to the main executive based on this information which explains what the macroeconomic indexs mean and the grounds why they are of import in footings of their possible impact on the company ‘s public presentation.

Index

Chile

Columbia

Venezuela

Economic growing ( GDP ) 2010

4.8 %

4.6 %

-3.8 %

Economic growing ( GDP ) 2011

5.7 %

4.4 %

-2.5 %

Inflation – 2009

-1.0 %

3.1 %

28.8 %

Inflation – 2010

1.7 %

2.5 %

30.6 %

Unemployment -2010 ( July )

8.3 %

12.7 %

8.2 %

Balance of Payments current history ( $ billion )

3.2

( 0.5 % of GDP )

-5.4

( -1.8 % of GDP )

20.1

( 9.2 % of GDP )

Interest rates

2.88

3.46

14.51

Government budget – 2010

Small shortage

( -2.1 % of GDP )

Small shortage

( -3.6 % of GDP )

Small shortage

( -3.2 % of GDP )

The purpose of this study is to understand that how the macroeconomic factors have an impact on economic systems and what effects do they hold on the countries- Chile, Columbia and Venezuela

What is Macroeconomics and what are its indexs?

Macroeconomicss is a subdivision of economic sciences which will concentrate on the different facets of the economic system and how they are interrelated to each other for coevals of wealth. The facets include public presentation of the state, its behavior and determination taken related to the economic system of the state. The major indexs of macroeconomics are unemployment, rising prices, economic growing, involvement rate and balance of payment.

Now, allow ‘s understand the significance of the macroeconomics cardinal indexs and analyse them from the informations collected from the three states – Chile, Columbia and Venezuela where our company is runing.

Economic growing:

The addition in the per centum in national end product per twelvemonth is called as rate of economic growing. It besides means rise in the growing of state ‘s productive potency over a period of clip in footings of Gross Domestic Product ( GDP ) per capita. To bespeak the value of GDP, the entire value for all the goods and service that are produced in the twelvemonth are added together. This consequence is than compared with those of the old twelvemonth to see what the current place of the state is. In the same mode the comparing can be done between assorted states to see which state ‘s economic system is turning faster? There can be positive or negative growing rate. When the economic growing rate is higher it means that the economic system of the company is turning and the growing is positive. Recession and economic depression both can hold a negative impact on the growing rate of economic system and it can be considered that economic system of the state is undertaking.

Economic Growth of Chile in 2010 is 4.8 % and this is a positive index. However in 2011 the economic growing of Chile is 5.7 % which is once more demoing a positive index. This positive index shows that the state ‘s economic growing is spread outing. The enlargement of economic growing in this state has been increased by 0.9 % from the twelvemonth 2010 – 2011 which means the economic growing of company is increasing by 0.9 % from old twelvemonth 2010.

Economic Growth of Columbia in 2010 is 4.6 % and this is a positive index and in 2011 the economic growing of Columbia is 4.4 % which is demoing a positive index. This shows that the state ‘s economic growing is spread outing in the twelvemonth 2010 and 2011. However the growing of economic enlargement has been decreased by -0.2 % in the twelvemonth 2011.

Economic Growth of Venezuela in 2010 is -3.8 % and this is a negative index. In 2011 the economic growing of Venezuela is -2.5 % which besides shows a negative index excessively. The negative index means that the state ‘s economic system has been undertaking and in instance of Venezuela, its economic system has been undertaking since last two consecutive old ages -2010 and 2011. However state economic system has shown its recovery by -1.3 % in twelvemonth 2011.

Inflation:

At any clip in the twelvemonth, there can be rise in the monetary values of the trade goods and goods used. This rise is called as Inflation. The chief aim of the state is to see that the monetary values of the goods are minimised and rate of rising prices is to be reduced. If the rate of rising prices is high than the monetary values are lifting really fast and if the there is autumn in rising prices agencies that the monetary values are turning at slow rate than earlier. The effects of rising prices on the economic system of the state can be many and they can be positive or negative. A autumn in the existent value of money and other assorted pecuniary points over a period of clip and an unknown hereafter may deter people from puting money ; these are some negative effects of rising prices. If people come to cognize that the monetary values of goods are traveling to increase than this will do people to purchase and stock goods and this may take to high rate of rising prices. Positive effects of rising prices can be such that the Bankss can promote people to put more money in non pecuniary capital undertakings.

Inflation of Chile in 2009 is -1.0 % and this is a negative index which shows the rising prices in the state Chile is lifting more slowly and in 2010 the rising prices of Chile is 1.7 % which is a positive index. This shows that rising prices is lifting at faster rate in Chile. The rising prices in the state has been increased by 2.7 % between 2009-2010 which shows that rising prices in Chile is lifting at much faster rate.

Inflation of Columbia in 2009 is 3.1 % and this is a positive index which shows the rising prices in Columbia is lifting more slowly and in 2010 the rising prices of Columbia is 2.5 % which is besides a positive index. This shows that rising prices is lifting more easy. The rising prices in the state has been decreased by -0.6 % between 2009-2010 which shows that there is low rate of rising prices.

Inflation of Venezuela in 2009 is 28.8 % and this is a positive index which shows the rising prices in the state is lifting more slowly and in 2010 the rising prices of Venezuela is 30.6 % which is besides a positive index. This shows that rising prices is lifting more easy. The rising prices in the state has been increased by 2.2 % between 2009-2010 which shows that there is high rate rising prices in Venezuela.

Unemployment:

Harmonizing to the authorities of UK an unemployed individual is person who is ready to make any type of occupation and is basking benefits of an unemployed individual. There can be batch of grounds for low degree of unemployment. This shows a bad impact of the state as the people who are unemployed are non lending to the production of goods and service and this consequences in the loss of end product and national income. They will non be able to purchase the necessary good and merchandises because they are provided with really small benefits. there is loss to the state besides as they have to supply benefits to these unemployed people as these people will non pay any revenue enhancement to the authorities alternatively the authorities will hold to pay them money and this will consequence the economic system of the state. If unemployment is high it will hold a negative consequence on the economic system of the state and if it is low than it will hold positive consequence on the economic system of the state.

Unemployment in Chile is 8.3 % which means that 8.3 % of entire population is unable to purchase all goods and services which they would wish to purchase.

Unemployment in Columbia is 12.7 % which means that 12.7 % of entire population is unable to purchase all goods and services which they would wish to purchase.

Unemployment in Venezuela is 8.2 % which means that 8.2 % of entire population is unable to purchase all goods and services which they would wish to purchase. All the three states are in positive but unemployment in Columbia is more compare to Chile and Venezuela.

Balance of Payments:

The state ‘s trading place with other states depends on the balance of payment that it has to make. Balance of payment history are of two types-capital and current history. Capital history means the flow of money between two states and current history means trading of goods and services between the states. Government should concentrate more on forestalling shortage to be big in the current history. if there is shortage in current history than it shows that merchandises of higher value are being bought in one state instead so merchandises being sent out of the state. The authorities should see to it that the imports should be less than the exports in order to equilibrate the economic system of the state. There will be diminution in degree of national income if proper financess are non received for the exports done by the state. It will besides cut down the value of state ‘s currency against other currencies- the exchange rate. There are positive or negative effects of the balance of payment. The current history will be higher if the exports are more than the imports and this shows that the balance of payment is positive and if current history is shortage than the state ‘s import is higher than its export and balance of payment is negative.

Balance of Payments current history of Chile is $ 3.2 billion that indicates positive tendencies in the Balance of Payments current history of the state. The positive Balance of Payments current history means that the state has greater value of export comparison to its value of imports. Chile ‘s Balance of Payments current history contributes 0.5 % of its entire GDP.

Balance of Payments current history of Columbia is $ -5.4 billion that shows negative tendencies in the Balance of Payments current history of the state. This is because Columbia has greater value of imports than its value of exports. This negative tendency would be a possible ground in a autumn of economic growing of the state in the twelvemonth 2011. GDP of this state gets -1.8 % of the part from the state ‘s Balance of Payments current history.

Balance of Payments current history of Venezuela is $ 20.1 billion. This shows that Venezuela has positive Balance of Payments current history. The state has seen the positive tendencies in its Balance of Payments current history because the values of the state exports are greater than values of the imports. Balance of Payments current history of the Venezuela contributes 9.2 % of the entire GDP.

Interest rate:

The state ‘s cardinal bank will make up one’s mind the rate of involvement and it will stand for the recognition monetary value. Basically involvement rate can be used to do recognition more or less low-cost for the people. As the involvement rate increase the people who have taken loans will confront trouble in paying money back as they will hold to pay more loans with the addition in rate of involvement. If the rate of involvement is less than this will do people take more loans so that refund for them will be easy. therefore as the impact of rate of involvement alterations, so will the demand of the money alteration and consequently people will take loans. Interest rate can be positive or negative. If involvement rate is high than it is negative and if it is positive than it will be low.

The involvement rate of Chile is 2.88 that mean the state has low involvement rate. The involvement rate of Columbia is 3.46 that mean the state has low involvement rate. The involvement rate of Venezuela is 14.51 that mean the state has low involvement rate. By comparing all three states, Chile has low involvement rate.

Government budget:

The one-year budget can be used as that beginning of information signifier which a batch of economic informations can be understood and it indicates about how the trade is doing overseas, about the rising prices rate etc. there are three types of budget: excess, shortage and balanced.

A balanced budget means that the authorities disbursement and the revenue enhancement sum generated is in balanced ratio. A excess budget means that authorities disbursement is less than the revenue enhancement sum received and a shortage budget means that the authorities disbursement is higher than the sum of revenue enhancement money received. In order to equilibrate the increasing demand authorities is seting excess money into the economic system than it can take out organize the revenue enhancement standard authorities will borrow money when the economic activity is lupus erythematosuss and disbursement of finance is more. This type of adoption of money is called as public sector cyberspace borrowing demand. ( PSNB ) .this is defined as one-year shortage and it means that the sum to be borrowed from the populace sector. The authorities will sell the securities to the private sector or will straight borrow the sum from cardinal bank of the state in order to supply finance in instance of shortage. The budget of the authorities can either be positive or negative. If it is positive it has a negative value for PSNB bespeaking authorities ‘s adoption and if negative than it ha a positive value which indicates authorities budget is in shortage.

Government budget of Chile is -2.1 % and it is negative index that means authorities budget is in shortage.

Government budget of Columbia is -3.6 % and it is negative index that means authorities budget is in shortage.

Government budget of Venezuela is -3.2 % and it is negative index that means authorities budget is in shortage. In all 3 states, Columbia has more shortage than Chile and Venezuela i.e. the budget disbursement of Columbian Government is more than Chile and Venezuela.

Decision:

On the footing of above macroeconomic informations given, the company ‘s public presentation in Chile is better than Columbia every bit good every bit Venezuela as per the economic growing. On the footing of rising prices, rising prices rises at faster rate in Venezuela whereas on the footing of unemployment, Columbia has more figure of unemployment per centum than unemployment in Chile and Venezuela and on the footing of Balance payment and Government Budget, Columbia has more export than import every bit good as budget disbursement of Columbian authorities is more compare to Chile and Venezuela severally.