MACROECONOMIC FACTORS

- WHAT IS A MACROECONOMICS FACTOR?

A macroeconomic factor is an influential fiscal, natural or
geopolitical event that broadly affects a regional or national
income.

- FACTORS
1. Inflation
Inflation refers to a broad increase in prices across many
goods and services in an economy over a sustained period of
time. Conversely, inflation can also be thought of as the
erosion in value of an economy's currency (a unit of currency
buys fewer goods and services than in prior periods).

2. Interest Rate
It is defined as the proportion of an amount loaned which
a lender charges as interest to the borrower, normally
expressed as an annual percentage. It is the rate a bank or
other lender charges to borrow its money, or the rate a bank
pays its savers for keeping money in an account.

3. Crude Oil

Oil price increase can also stifle the growth of the

economy through their effect on the supply and demand
for goods other than oil. Increase in oil prices can depress
the supply of other goods because they increase the costs
of producing them.
4. Gross Domestic Product (GDP)

Gross Domestic Product (GDP) is a broad measurement of

a nation’s overall economic activity. GDP is the monetary
value of all the finished goods and services produced
within a country’s borders in a specific time period.

5. Index of Industrial Production (IIP)

Industrial Production (IIP) is an index that shows the
performance of different industrial sectors of the Indian
economy. The IIP is estimated and published on a monthly
basis by the Central Statistical Organisation (CSO). As an
all India index, it gives general level of industrial activity in
the economy.

6. Purchasing Manager Index (PMI)

The Purchasing Managers' Index (PMI) is an indicator of
the economic health of the manufacturing sector. The
PMI is based on five major indicators: new orders,
inventory levels, production, supplier deliveries and the
employment environment. The purpose of the PMI is to
provide information about current business conditions to
company decision makers, analysts and purchasing
managers.

7. Monetary Policies

Monetary policy consists of the process of drafting,

announcing, and implementing the plan of actions taken
by the central bank, currency board, or other competent
monetary authority of a country that controls the
 quantity of money in an economy and the channels by
which new money is supplied.

8. Forex Market

Forex (FX) is the market in which currencies are traded.

The forex market is the largest, most liquid market in the
world, with trillions of dollars changing hands every day.
There is no centralized location, rather the forex market is
an electronic network of banks, brokers, institutions, and
individual traders (mostly trading through brokers or
banks).

9. Balance of Payment (BoP)

The balance of payments (BOP) is a statement of all

transactions made between entities in one country and
the rest of the world over a defined period of time, such
as a quarter or a year.

10. Trade Wars

A trade war happens when one country retaliates against
another by raising import tariffs or placing other restrictions
on the opposing country's imports. A tariff is a tax or duty
imposed on the goods imported into a nation. In a global
economy, a trade war can become very damaging to the
consumers and businesses of both nations, and the
contagion can grow to affect many aspects of both
economies.

11. Monsoon
Indian economy is vitally linked with the monsoon because
of its water resources. A large part of the country gets more
than 75% of the annual rainfall during the four months, June
to September. The production of food grains depends fairly
closely on the amount and distribution of monsoon rainfall
over the country.