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195 Country Macroeconomic Forecast 2021

  • ID: 5360072
  • Report
  • April 2021
  • Region: Global
  • 213 Pages
  • Countrywatch

The Macroeconomic Forecast projects the major macroeconomic variables of each of the established countries in the world over a 20 year period. In addition this Forecast provides five years of history. These variables include GDP and its principal components: consumption, investment spending, government spending, exports and imports. In addition, the Macroeconomic Forecast makes projections on inflation, interest rates, inflation rates, foreign exchange rates, fiscal policy including tax rates, and the primary components of the balance of payments as well as foreign exchange reserves. The real GDP and inflationary trends are used in an integrated fashion in each of the other forecast segments to provide a forecast that is integrated across all segment lines ( i.e. the GDP that drives the demand for energy products is the same one that drives demand for metals and agriculture).

The macroeconomic forecast, as the name implies, seeks to answer the question; How is this country doing overall? 

What can we quantify in order to get an apples to apples comparison between countries? There are 31 variables calculated through the macroeconomic forecast. The first group is nominal GDP and its components. Calculated in local currency units, this builds on the equation Y= C+I+G+NX. Here, we can see how these different components work together and be able to make inferences about the financial health of a country. For example, being able to notice a decreasing trend in investment or consumption may serve as a proxy for economic shocks, major changes in fiscal or monetary policy, or something potentially more serious. 

The second cluster is straightforward. Data is imported for population, and from that the model produces two other values. Population growth rate is easily calculated and acts as a metric for overall growth of a country. Most nations experience little volatility in population growth, although a large increase may indicate a geopolitical shift, a increase of land geographically, or an increase in life expectancy, to name a few. The last is GDP per capita measured in LCU, as it acts as a straightforward way of determining the overall welfare of a country’s citizens. 

Next, real values and inflation rates are measured to build on the information provided by GDP. Moving from current local currency units to constant local currency units serves as a more accurate way to judge economies based on time, especially when a forecast extends across multiple decades. The four values are Real GDP, Real GDP growth rate, GDP deflator, and Inflation rate. In total, adjusting for inflation is an easy way to judge true levels of economic growth over time. It helps create a more accurate forecast.

Following the real values, the next portion of the forecast details the fiscal policy of each country. Through this, the six values calculated include government fiscal budget, fiscal budget growth rate, government revenues, effective tax rate, government deficit/surplus, and government deficit/surplus as a percentage of GDP. Fiscal policy analysis allows for a better look into the political institutions of a country. Government spending occurs and many forms and varies across countries. It shows among other factors, how much of a role the government plays in regulating and owning portions of the economy. For several of these values, there is not a perfect level, and being higher or lower is not always beneficial.   

After reporting the values associated with fiscal policy, the model then reports those associated with monetary policy. These are: money and quasi-money (supply of M2), money supply growth rate, interest rate, and unemployment rate. These four variables also show a window into a country’s economic institutions, but here the observations include those associated with a given currency and how each individual country controls its money supply. M2 acts as the most accurate account of how much money is available within a country’s economy at a specific time. This can help show the economic health of a country and any potential changes of a currency. The growth rate of the money supply and inflation are understood to be correlated according to monetarist theory. Therefore, across countries, there should be an obvious relationship between the two. Likewise, another important part of macroeconomic theory, the Phillips Curve, shows a negative relationship between unemployment rate and inflation rate. Knowing this detail, comparing a country’s growth in one over time can help answer questions about the other. 

The last two clusters of variables detail a country’s direct relationship with others through exchange rates. Calculated values along with official exchange rate include total foreign exchange reserves, trade balance as a percentage of GDP, and trade balance NIPA (National Income and Product Accounts). These values give a glimpse as to how a country trades with others and how that contributes to overall output. Countries that are more self sufficient or isolationist may trade very little, while others with limited resources may require greater amounts of imports. Again, these variables can also reveal information about a particular county’s institutions. 
Lastly, the forecast reports imports, exports, and nominal GDP in US dollars. This is mainly to build on information about a particular country in related to the United States. In total, that is 31 variables that act as the palette of paints used to craft an image on a canvas. 

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I. Global Economic Overview
II. Country Macroeconomic Data 
III. Macroeconomic Model

Note: Product cover images may vary from those shown

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