ECONOMIC INDICATORS #
An economic indicator is a statistic that represents an economic activity to establish the health of an economy and can also be used to predict future investment possibilities. Economic indicators provide a composite view of economic performance. A few of such are inflation rate, policy rate, and GDP growth rate.
GDP Growth Rate #
GDP is the value of everything produced within a country over a specified period of time. GDP growth rate is the measure of economic growth referencing the GDP of an economy. A growing economy may signal a boost in economic activities and thus a healthy economy which may mean the availability of superior investment prospects.
Policy Rate #
The policy rate is the rate at which Central Banks (Federal Reserves) lend to domestic banks. Central Banks expand the economy by reducing the policy rate (i.e. reducing the cost of funds). Policy rate signals investment prospect as regards expectation about inflation and the level of interest rates
Inflation #
Inflation is the rise in the general level of prices of goods and services over a period of time, thus reducing the purchasing power of money. Inflation may be a result of more money chasing fewer goods or high costs of production which is factored in the price of goods. It is therefore prudent to consider an investment with a future value that compensates for inflation.
Careful consideration of these and other indicators can help make an informed decision regarding the economy as well as investment prospects.
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