WHY IS THE HEALTH OF A COUNTRY IS NOTED FIRST OF ALL OTHER FACTORS –
well, Whenever we have any general health problem which is not common as viral fever or cold then we definitely move to the doctor and then the doctor gives us certain tests to perform in order to get to the depth of problem and Diagonise it, as a scientific process.
now as you perform the tests Then the doctor Diagnosis and tells you that what is the actual reason for the problem that you are facing, same concept and thinking goes with markets when you just want to invest in it.
We know that health has many indicators like ( blood pressure, ECG, vitamin , albumin, Cholesterol, etc) but so does any economy has multiple indicators through which we can determine What we can do in this economy.
i just want to share how we at bridgenile operate by indicators so that if you are serious about markets can Definetely learn from here and do let me know if there is any query so that we can have a thoughtful discussion at Invsubhojit@bridgenile.com.
this will be the series of blogs that i will be sharing my Research on DEBT CRISIS which in parts i will share here always feel free to ask any question if you are serious or else you can leave it here and read our previous blogs.
TOP INDICATORS THAT IMPACT A COUNTRY –
So as we move forward we understand that These indicators makes an solid impact on the economy of a country.
THE IMPACT OF GDP :
GDP does plays a vital role on the economy, if you had read my blog “THE UPCOMING ECONOY 2024-2025” there i have shared details on how GDP makes an impact on the economy and its full details.
please click the link and read the entire blog if you Haven’t for better understanding of the upcoming topics.
THE IMPACT OF INTEREST RATES:
well in this case the RBI plays a vital role in the economy just by observing the liquidity and spending Capacity of the country.
The central bank (RBI) has basically two options with indian economy mainly with Interest rates –
• REPO RATE HIKE : which means that when there is tremendous amount of inflation in economy and spending gets out of control then the central banks decides to hike repo rates, which lowers their borrowing and spending power.
( in other words it just forces people to cut their spending).
• REPO RATE CUTS: which means that when the economy has suffered a significant downturn and Losses then in order to pump more free cash (Liquidity) into the system they print more money and lowers the Interest rate which is the repo rate.
now what Happens is people can borrow money for less interest rate from banks and buy goods and services which makes the economy Booming again.
On the next blog we will discuss in details about the RBI monetary policy and how it works, but here i am just sharing in general that how does it actually works.
IMPACT OF UNEMPLOYMENT RATES
a country is vastly measured by its rate of Unemployment, more the Unemployment the worse is the situation of the country and to its economy.
So in order to keep the unemployment rate lower the central government has to maintain the interest rate and Controll the Economy.
Unemployment rates impacts the core strength of the country by defining how they can move forward and how much they can spend over the year.
but the best part Remains that even after such calculation there is always Fiscal Deficit( when an economy spends more then they earn) for the government, so the more you got Through analysis the more you just understand that this is how every nation works and this is the rule that links all the nation together and that has been done since ages.
TRADE IMBALANCE
Its a crucial factor the trade imbalance, this condition always comes in due to the imbalance of import or export of a country.
That means when a country imports more goods and services then it exports that is what we call as Trade deficit.
when a country exports more as compared to imports then that is known as trade surplus, which is very rare in todays world ( eg: cHINA).
The country with more trade surplus is defines to have more strength as its rate of unemployment Remains under control and with it its gDP and Interest rates as well.
So observing this indication you have to notify that weather the country you are staying in is trade surplus or trade Deficit.
well there is a lot to trade Imbalance and other topic as well as i have told you earlier on, this is a short summary of representation of what we will share on the upcoming articles.
THE IMPACT OF INFLATION
inflation is defined as the total amount of money spent / goods sold, when you just understand inflation what you get is all the above Factors impacts inflation.
inflation is impacted by Multiple Variation which we will Obverse and go through in the upcoming articles.
mean time if you just want to understand the difference between the inflation , Deflation and stagflation please Click here.
stay tuned for the next topic “ Impact of monetary policy”.