Economic Analysis

The economic analysis method made with macroeconomic indicators is one of the main points
of basic analysis. Due to the fact that the markets have become a single market with
globalization, global economy studies are also of great importance in economic analysis. While
the healthy progress of the economy produces positive results, in some cases, the good progress
of the economy may have negative consequences. Therefore, economic analysis demands a
great deal of detail and attention.
The analyzes generally show the effects of the country's economy on the local market or show
what the expectations will be.
For example, if the economy progresses with positive results, it may lead to a decrease in the
prices of securities such as bonds and bills, resulting in a decrease in stock prices. Another
consequence of this situation can be expected as an increase in interest rates.

How to Make an Economic Analysis? What are the Indicators?

Global Economy
The national economy and markets are greatly affected by the performance of the developed
economies of the outside world. Especially today, the economy of the USA affects other
economies.
For example, the crisis periods in the USA greatly affected the markets and caused a great
decrease in the prices of stocks.
Examining the economic indicators not only in the USA but also in other developed countries
will create a detailed economic analysis.
National Economy
Political stability and good political management are the most important factors affecting
macroeconomic indicators in the national economy. It is very important to examine and interpret
these indicators well.
Macroeconomic indicators that are frequently used in national economy analysis:
✓ Inflation rate
✓ Interest rate
✓ Employment
✓ Annual Growth Rates
✓ Gross national product
✓ Budget Deficit
✓ Exchange Rate and Currency Reserve
✓ Foreign Capital
Interest Rate and Inflation
Interest is the cost of money. The high cost is directly proportional to the decrease in preference.
High interest rates hinder firm investment and growth. In addition, high interest rates will lead
to a decrease in consumption.
Inflation creates the difference between nominal interest and real interest rate. High inflation
will increase the real interest rate and cause it to grow in awareness. High inflation rate (increase
in real interest rate) causes a decrease in investments and consumption.
Annual Growth Rates and GDP
The growth rate is measured by the increase or decrease in per capita income in the country. Of
course, real GDP should be taken into account in these calculations. It is desirable that the
annual growth rate be higher than the other period. In this way, an inference can be made that
investments and consumption increase. In addition, growth rates are also calculated on a
quarterly basis. It is an important indicator for economic analysis.
Employment
Increasing investment and production also increases employment. The increase in employment
is an indication that the national economy is moving in a good direction. Employment directly
affects the unemployment rate. The falling unemployment rate also indicates that the economy
is growing.
Gross national product
Net factor incomes from the outside world are added to the GNP calculations and the incomes
obtained from outside the national borders are added. The difference between import and export
is found by adding up. Thus, information can be obtained about how companies and consumers
behave.
Budget Deficit

EU Defined General Government Budget Deficit/GDP (%)

A high budget deficit may signal a decrease in investment expenditures or an increase in taxes.
Both situations can happen at the same time. Increasing taxes will lead to a decrease in
consumption. Having a large budget deficit is not a desirable situation. Monitoring the direction
of government policies will constitute a good economic analysis.
Foreign Trade Volume and Deficit

Foreign trade volume and deficit are good indicators for economic analysis. It shows the
country's exports, imports, the difference between them and the foreign trade volume. It is
desirable that exports be higher than imports. It shows that the products obtained by the
companies are also in demand abroad. The high level and growth of exports indicate that
companies will exhibit investment-oriented behavior and that they are growing.
Exchange Rate and Currency Reserve
While the high exchange rate creates positive results for some situations, it can create negative
situations for some situations. It is a piece of analysis that greatly influences economic analysis.
While the increase in the exchange rate and the depreciation of the domestic currency create a
positive result for exports, raw materials etc. purchased from abroad. negative consequences
for supplies. At the same time, the high exchange rate allows imported goods to become more
expensive and local goods to become cheaper. In this case, the demand for local goods
increases.
Foreign Capital
It is one of the most followed and important items that direct the analysis of recent times.
Foreign investors, local companies, etc. It helps companies to grow by helping their
development. Foreign capital greatly affects investment and profits. It also shows that the
foreign investor gives good results in the analysis of the country in which they invest and their
expectations are increased.