Macroeconomics Country Outlook

Running head: MACROECONOMICS COUNTRY OUTLOOK
Macroeconomics Country Outlook
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MACROECONOMICS COUNTRY OUTLOOK1
Table of Contents
1. Introduction..................................................................................................................................2
2. Background and History..............................................................................................................2
3. Definition of selected macro variables........................................................................................3
3.1 Real GDP per Capita.............................................................................................................3
3.2 Growth in Real GDP per Capita............................................................................................4
3.3 Inflation rate...........................................................................................................................4
3.4 Unemployment rate...............................................................................................................5
3.5 Interest rate............................................................................................................................5
4. Five Year Average Prediction.....................................................................................................5
5. Explanation of Forecast...............................................................................................................6
6. Conclusion...................................................................................................................................8
7. References....................................................................................................................................9

MACROECONOMICS COUNTRY OUTLOOK2
1. Introduction
Forecasting is a tool that is used by economists and businesses to predict about the future
based on the data of current values. This helps in denoting the future outcomes, in
correspondence to the performance of economic indicators such as Gross Domestic Product
(GDP), inflation rate, interest rate, rate of unemployment, per capita real GDP and the percentage
growth in break GDP. This is because the economic performance is dependent on the value of
goods and services produced in a given year. The forecasted data acts as a guideline for the
economy to plan and implement policies according to the changing market outcomes (Locke,
2018). Therefore, it is important to know about the background of an economy and plan policies
that boosts up the economic growth of the economy. The analysis is to be based on Italy. The
aim of the paper is estimate the changes in the value of economic indicators with forecasted data
for Italy and interpret its changes.
2. Background and History
Italy has a complex economic condition that is diplomatic for the developments of
businesses. It has an economic freedom score of 62.22 and ranks among the top 80th freest 2019
index. Although, Italy has very few resources to source its growth, the economy continues to
deliver moderate growth. The country is well known for its political structure that is backed by
corruption, high public debt, labor market inefficiencies, weak financial sector, poor
management techniques, and inactive judicial system (Codogno, 2019). The economy works
under a complicated regulatory framework where conducting business generally involves high
cost and most of the economic growth is generated from the informal sector.

MACROECONOMICS COUNTRY OUTLOOK3
World Trade Organization is an international agency that provides with a set of rules that
is needed for undergoing international trade. It is actively engaged in the provision of quality
trade relations between nations by offering free movement of goods mad services across
economies. Italy has registered under WTO on January1, 1995 and gets most of its funding from
the European Union who provides a single tariff and trade policy for its member states. It is also
a member of NATO which creates a formal alliance between Europe and North America.
The economy is heavily dependent on imports and most of the products are imported
from Germany, France and China. Exports earning is mostly sourced from US, which is
insufficient to balance the growing trade deficit (Langella, 2018). The economy is marked with
diverse industrial sectors with less developed agricultural sector. The growth rate has
significantly gone down in the past years with a quality change in the industrial sectors which
has led to rising rate of unemployment. Italy fell into recessionary period for the third time in a
decade in the last months of 2018, with a shrinkage in growth rates of about 0.2 percent
(Capussela, 2018). The economic performance is degrading since the recessionary period of
2018 and is continuously shrinking in value with falling growth rates and higher unemployment
rates and rising banking problems. Thus, Italy is under a great economic crisis and it is crucial to
study about its future outcomes.
3. Definition of selected macro variables
3.1 Real GDP per Capita
Gross Domestic Product is an important measure that estimate monetary values of goods
and services in a nation. Now values of goods and services can be estimated either in nominal or
current year prices or in real or fixed year price. GDP at current year prices is called nominal