How to determine a good or bad economy of a country

An economic study reveals how people decide to use the resources, including the time and talents they have access to, the land, the buildings, the equipment, other tools, and the skills to combine all these things. elements to produce useful products and services.

From an economic point of view, many important decisions can be made: how much time do you spend on work, study and leisure, how much money do you spend, how much do you save and how do you spend resources to produce goods and services.

Other important choices are elections and those relating to the definition of levels of taxation and the role of government.

Often people talk about a good, bad, weak and strong economy, but what indicators, signs or factors can we use to support our argument?

·Gross domestic product (GDP) and GDP per capita

GDP is clearly the most important macroeconomic indicator of all to understand the strength of an economy at a given historical moment. Gross domestic product (GDP) is the total of final goods and services produced by a country over a period of time. The period of time taken as a reference is usually 1 year.

The higher the GDP, the more the economy of a country is advanced, but most importantly, the higher the GDP grows, the more the economy of a country grows. Conversely, a drop in GDP indicates a recession, which indicates a deterioration in a country 's economy.

Very often, we forget that in addition to the size of the GDP itself, we must also take into account the size of each country, its population and in fact, the indicator to monitor to understand the wealth of citizens. are "GDP per capita" and not GDP.

The GDP per capita indicates the GDP per citizen and the higher this indicator, the more rich the citizens of the country. The lower the indicator, the poorer the citizens of the country.

However, it is clear that GDP per capita must be interpreted according to the country. For very small countries, it is obvious that their GDP per capita is very high, even if it does not indicate an overall economic development superior to that of countries like the United States or Germany.

·Employment
Achieving full employment is clearly one of the main goals of a country's government. Although a minimum percentage of unemployment is often natural, in general, the unemployment rate is lower, the better.

Employment is linked to GDP and economic growth because the higher the GDP, the lower the unemployment rate. There are also specific unemployment rates for certain categories of people, for example women or young people.

Fighting unemployment in certain categories is often even more difficult than unemployment in general. Think of the scourge of youth unemployment in Africa, which is currently very high.

·Inflation
Inflation is the widespread and prolonged rise in prices which causes a decrease in the purchasing power of the currency. It is now well established that the ideal inflation rate for an economy is about 2% per annum.

An increase or decrease in annual inflation far above 2% or much less than 2% penalizes an economy. Inflation control is one of the tasks of central banks.

·Consumption
Consumption is a real benefit for the economy; if it increases, the demand for goods and services increases and, consequently, production and labor increase. In the end, the increase in consumption leads to an increase in wealth and GDP.

The clbadic indicator for understanding the evolution of consumption is called retail sales. If they increase, it is an excellent signal for the economy and can mean that the economy is expanding.

In contrast, a decline in retail sales is often a symptom of the fact that the economy is in recession. Macroeconomic indicators need to be compared to the overall situation.

Finally, in today 's globalized world, we must always compare the performance of an economy to the global economic and financial situation.