The Economic Environment Facing Global Business
KEY MACROECONOMIC INDICATORS
• Economic Growth
• Inflation
• Surpluses & Deficit
KEY MACROECONOMIC INDICATORS : ECONOMIC GROWTH
• GDP and GNI (or GNP)
– High or Low
– total amount of goods and services produced in a year within the domestic territory) or GNI (GDP + net income)
– Per capita GNI (total GNI divided by total population)
– PPP GNI (unmber of units of a country’s currency required to buy the same goods and services in the domestic market that $1 will buy in USA

KEY MACROECONOMIC INDICATORS : INFLATION
• Increase in prices
• Inflation rate percentage increase in the change in prices from one period to another, usually a year
• Demand more than supply
• Inflation effects
– interest rates
– exchange rates
– cost of living and
– General confidence in a country’s political and economic system
KEY MACROECONOMIC INDICATORS : INFLATION
• Inflation and Interest rates
• High inflation – High interest rates

KEY MACROECONOMIC INDICATORS : INFLATION
• Inflation and Exchange Rate
• Higher inflation – devaluation
• Case 1
• UK exporter – US distributor
• Cost 100 pounds Exchange rate $1.59 / GBP
• Cost to US distributor $159
• Case 2
– High Inflation – exchange rate constant – exports will be costly
• Cost 110 pounds Exchange rate $1.59 / GBP
• Cost to US distributor $174.90
– High Inflation – currency devaluation – exports will be competitive
• Cost 110 pounds Exchange rate $1.47 / GBP
• Cost to US distributor $161.70

KEY MACROECONOMIC INDICATORS : INFLATION
• Inflation and cost of living
• Less disposable income with consumers

• Inflation and government
• Under pressure to bring down inflation
• Rise interest rates for slow economic growth – social unrest
• Protest if any control over wages

KEY MACROECONOMIC INDICATORS : SURPLUSES AND DEFICIT
• Balance of Payment