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Macroeconomic indicators to monitor business and the economy
Assignment 02
School of Business Mgmt. and Information Technology, University of Doha for Science and
Technology
ECON 2010: Business Economics
Fall 2022
October 7, 2022
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Table of Contents
Macroeconomic indicators to monitor business and the economy ................................................. 3
References ....................................................................................................................................... 7
List of Tables and Figures
Figure 1: Counsumer Price Index ................................................................................................... 6
Figure 2: GDP of Qatar ................................................................................................................... 6
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Macroeconomic indicators to monitor business and the economy
The first article talks about how the second quarter of Canadian economic growth lagged
and even turned negative in July, indicating that the economy may be cooling off faster than
anticipated. Additionally, it reveals that Canada's economy expanded at an annualized rate of 3.3%
in the second quarter, which was lower than both analyst and Bank of Canada expectations of 4.0%
and 4.4%, respectively. Lower manufacturing, wholesale, retail, and utility production in July was
the main cause of declines.
The second article discusses Qatar's plans to accelerate real GDP growth over the next eight
years. According to Emirates NBD, Qatar is expected to expand its real GDP by 5.1% this year,
which would be the "highest pace" of growth since 2014. The non-hydrocarbons industry is
expected to increase by 6% this year, which is the highest growth rate in the GCC.
The third article shows 5 economic charts that Canadian economists need to use to analyze
economic growth which includes indicators like Real GDP, Consumer Price Index, interest rate,
housing prices and average wage.
Real GDP and the Consumer Price Index are the macroeconomic indicators that will be
discussed in this section. Gross domestic Product (GDP) is the monetary value of all final goods
and services produced and sold in a country during a specific time period. Real GDP, on the other
hand, is a measure of a country's GDP that has been adjusted for inflation. This provides a clearer
picture of a country's economic growth. The Consumer Price Index (CPI) is a measure of the
average change in prices paid by consumers over time in a market. It is one of the most important
indicators for determining inflation and deflation. These macroeconomic indicators are measures
of many components of the economy that are used to judge what has happened and what is likely
to happen in the future.
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Countries with higher GDPs create more products and services, and Real GDP is used to
calculate economic growth. You must utilize real GDP to ensure that you are measuring true
growth, not simply price and wage raises. Qatar utilizes it to assess an economy's performance.
For example, Qatar's real GDP has quadrupled by four in less than 20 years. Qatar's economy has
grown dramatically, from around QR200 billion in 2002-2003 to QR800 billion in 2019. (Shoeb,
2021). This measure provides Qatari economists with a clearer understanding of how a country's
total national production changes from year to year. This measure is significant since it helps assess
a country's economic health and is more accurate and inflation-adjusted.
The Consumer Price Index (CPI) is a popular tool for monitoring inflation and deflation.
It is a price index for consumer items that is used by governments and central banks to make
economic choices because it offers an approximate indication of the cost of living. If food price
inflation persists, the central bank will respond by boosting interest rates, reducing consumers'
purchasing power. It is significant for Qatar since it reflects the country's cost of living. For
example, Qatar's Consumer Price Index (CPI) increased by 0.13 percent in August compared to
the previous month (July 2022), with 2.61 percent increases in Housing, Water, Electricity, and
Other Fuel (The Peninsula, 2022). This means that the average price of housing, water, electricity,
and fuel has risen, raising the cost of living and income in Qatar.
Real GDP measures the final value of goods and services; however, it does not value
household production (such as activities done in homes like cooking, doing laundry, etc.),
underground production (hidden activities avoiding taxes), leisure time, and environment quality
(i.e., if standard of living is impacted by pollution, Real GDP does not show the effect caused by
it), and it also excludes health and life expectancy, which illustrates the state of a nation's quality
of life. The Consumer Price Index does not account for the purchasing patterns of those who live
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outside of urban or metropolitan regions and does not track social or environmental factors or
trends that can influence price changes over time.
The formula C+ I+ G+ (X-M) (expenditure method) is used to calculate a country's nominal
GDP. The Real GDP of the nation is then calculated by dividing the Nominal GDP by the GDP
deflator (R). Dollars are used to represent real GDP. To determine the consumer price index, first
identify the market baskets for each category and the price-measuring urban regions. Then, the
formula CPI = Cost of market basket in a given year / Cost of market basket in base year x 100 is
used to get CPI. The base year is a benchmark figure used to evaluate price variations from the
specified year. Every month, the Consumer Price Index is updated and recalculated.
The substantial increases in both the hydrocarbons and non-hydrocarbons sectors have led
to Qatar's "rapid" surge in real GDP growth, as highlighted by Emirates NBD (John, 2022). The
hydrocarbons industry's 6% rise contributed considerably to Qatar's real GDP increasing by 5.15%.
In Canada, however, weaker production in manufacturing, wholesale, retail trade, and utilities led
in a 0.15 decrease in real GDP in July (Gordon, 2022). However, increased transportation costs, a
lack of wheat supply to meet strong demand, and other factors contributed to inflation and an 8.8%
increase in consumer food prices in April and these acts contributed to an increase in the Consumer
Price Index, indicating the rising cost of living in Canada (Potter, 2022).
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Figure 1.
Consumer Price Index
Note. From Factset [Photograph] by Statistics Canada (n.d)
(https://insight.factset.com/hss/hubfs/1)Insight/2022/06.2022/06.06.2022_Canada_Econ_Charts/canadafood-energy-inflation.png?width=1845&name=canada-food-energy-inflation.png)
Displays detailed graph on consumer price index of Canada.
Figure 2.
GDP of Qatar
Note. Image shows GDP of Qatar from 1987 to 2027. Reprinted from Statista, n.d.
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References
Gordon, J. (2022, September 01). Canada's Q2 GDP growth lags expectations; contraction seen
in July. Retrieved from Reuters: https://www.reuters.com/markets/us/canadas-q2-gdpgrowth-lags-expectations-contraction-seen-july-2022-08-31/
John, P. (2022, August 08). Qatar set to clock 'fastest pace' of real GDP growth in 8 years at
5.1% in 2022. Retrieved from Gulf Times: https://www.gulftimes.com/story/722376/Qatar-set-to-clock-fastest-pace-of-real-GDP-growth-in-8-yearsat-5-1-in-2022
Potter, S. B. (2022, June 06). Five economic chart to watch in 2022. Retrieved from Factset:
https://insight.factset.com/five-economic-charts-to-watch-in-2022-canada
The Peninsula. (2022, September 15). Qatar’s CPI increases marginally in August. Retrieved
from The Peninsula: https://thepeninsulaqatar.com/article/15/09/2022/qatars-cpiincreases-marginally-in-august