The economic growth rate shows the overall economic performance of the country. It is calculated by taking the gross domestic product or the G.D.P. It can be interpreted as the output per capita at current prices. The values range from zero to one. Economic growth rate can help investors and financial institutions to determine whether a certain investment is worth making.
Generally, the economic growth rates are based on prevailing interest rates. It shows the changes in the long-term interest rates. The rates are used to compare the level of profitability between different types of risk within the market. For example, the utility companies have long needed support from the government to secure their loans. At times, rates are kept low in order to keep out competition.
To make economic measurement easier, some countries introduced a dual-rate policy. In this case, the rates are generally lower than the national rates. This helps the domestic industry to secure its loans and builds up the country's currency. When national rates start to rise again, the rates of export easily counteract it and grow faster.
The economic growth rate can also be used to predict inflation. It shows the fluctuations in the cost of living through time. It is widely used in macroeconomic indicators such as interest rates. The rates are considered to be a good measure of inflation as they are closely linked to the cost of living index. Accordingly, the Bank of International Settlements (BIS) releases an economic growth rate that indicates how well the economy is performing.
A monthly economic growth rate graph can help you in making better decisions in your business transactions. If we look around us, we can see that business conditions all over the world are extremely varied. Therefore, predicting what will happen next in any economy would be difficult. In fact, even governments often make mistakes in predicting what will happen to the economy. The best thing to do if you want to use a graph to your benefit is to combine it with other important economic indicators.
For example, if you want to know about the trade balance, then you need to look at the trade deficit. Similarly, if you want to know about inflation, then you need to look at the Consumer Price Index (CPI). In addition to these two other indicators, you can also look at the gross domestic product (GDP), consumer debt and growth, durable goods orders and government spending. However, you need to choose a reliable chart software to access this information. Once you have downloaded the right chart software, you can plot the economic growth rate on your chart.