The Macro Economic Forecasts Economics Essay

Businesss are necessarily affected either positively or negatively by alterations in the macro-economic environment in which they operate. Our undertaking will concentrate on Netflix Incorporation, which is one of the largest houses runing in the US market. The US market is presently confronting an economic crisis and this poses a major menace on the attainment of the marks that have been set by the direction of Netflix. Changes in the undermentioned macro-economic factors may impact the public presentation of Netflix: rising prices, degrees of unemployment, alterations in the existent and the nominal GDP, alterations in the involvement rates degrees and alterations in the import and exports degrees. Our undertaking will concentrate on the prognosis between the month of January and June 2013.

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Harmonizing to the prognosiss made by Financial prognosis Centre, the existent gross domestic merchandise will stay changeless for the first three months, that is until March 2013, and will so worsen for the other one-fourth until June, 2013. The nominal GDP will follow the same tendency as the existent GDP and will worsen and stay changeless in that place until the terminal of the 2nd one-fourth. The unemployment rates are expected to worsen in the first three months, nevertheless, in the last three months until June, 2013 the rates are expected to get down lifting. The rising prices rates are expected to travel in the negative way in the first three months. However, in the last three months until June 2013, the rates of rising prices will travel in the positive way and increase systematically until June 2013. Harmonizing to the Financial Forecast Centre anticipations, the Bankss ‘ loaning involvement rates will stay changeless throughout the six months period of our prognosis. Based on the above prognosiss of these macro-economic factors, we can foretell that the fiscal public presentation of Netflix will be negatively affected. Our undertaking will analyze these deductions of the macro-economic factors in inside informations.

Notes on the above graph

The X-axis represents the months for the assorted old ages from December 2010 up to June 2013. The periods are organized into one-year quarters ( that is January to March, April to June, July to September and October to December ) for each twelvemonth.

The Y-axis represents the per cent of the existent GDP growing rate for each twelvemonth ( that is 0.5, 1, 1.5, 2, 2.5 and 3 ) .

The above figure exhibits the growing in the existent GDP for the US market. The GDP growing rate as observed from the above tendency portrays a downward tendency. The GDP growing in January 2013 has declined by 0.7 % ( 1.5-.8 ) compared to that of December 2012. The GDP has been fluctuating over the past two old ages. Between January and June 2011, the GDP growing rate remained comparatively the same. In July 2011, the rate declined somewhat by about three per cent. In September 2011 the rates increased somewhat by about the same rate of 0.3 % . In January 2012, the growing rate increased by about 0.5 per cent compared to the old one-fourth that ended on December 2011. In April 2012 the rate declined somewhat by about 0. 3 % . In July 2012 the rate increased by approximately 0.5 % . In the following one-fourth ( July 2012 to September 2012 ) , the GDP growing rate diminutions by one per cent. In October 2012, the rate diminutions by a farther 1 % compared to the old period. During the first one-fourth of our prognosis ( January, 2013 ) , the rate lessenings by 0.7 % . In the 4th month of our prognosis period ( April 2013 ) , the rate diminutions somewhat by about 0.3 % compared to March 2013. The rate remains changeless until the terminal of the prognosis ( June 2013 ) . The negative tendency in the growing of GDP implies reduced economic and investing activities in the US economic system. This translates to less employment in the economic system, less borrowing and lending activities and overall diminution in the growing of the economic system. The per capita does non turn and hence the economic power of the population declines. A decrease in the existent GDP implies that the buying power for the population is reduced and therefore there is less money available for the citizens to buy the goods. This signifies a likeliness of a decrease in aggregative demand for the entire end product of the goods produced by the houses in the province. This poses a menace to the demand of goods produced by Netflix. The alterations in this parametric quantity are important in the fiscal public presentation of the house. Due to the decrease in the populations economic power, the grosss generated from the sale of Netflix will be affected negatively. This is because the merchandises offered by Netflix are non basic and therefore follow an elastic demand curve. A negative alteration in any of the factors impacting their demand significantly affects the demand of the merchandises. Another facet in which the factor affects negatively on the public presentation of Netflix is due to the economic downswing the cost of inputs is likely to increase. This is because less investors/producers are bring forthing hence there is deficiency of assortment and less competition that is reflected in increased monetary value of inputs. This will take to a rise in cost of goods produced by Netflix that will ensue to a diminution in the border gross net incomes realised by Netflix in the long tally. The impact of this negative alteration in the growing of GDP will be reduced net incomes for Netflix.

The X axis represents the assorted months ( January 2011 to June 2013 )

The y-axis represents the per cent of Consumer monetary value index alteration for each period.

The above graph shows an analysis of the US rising prices rate. The rising prices rate has been worsening for a important period in the old two old ages. The rate rose steeply in the first one-fourth of 2011. In June 2011 the rate dropped somewhat by about 0.1 % . In the 3rd one-fourth of 2011, the rate increased constitently until August 2011.Since August 2011 the rising prices rates declined but at changing magnitude until June 2012. The rising prices rate started lifting in July 2012 until September 2012. Since September 2012, the rates have been worsening until March 2013. The rate is expected to go on worsening somewhat in the fast foremost three months, which is until March 2013. However, after that, the rising prices rates are expected to get down lifting continuously.

The diminution in the rising prices rates in the first stage of my forecasting period is a positive mark. Low rising prices rates enhance the economic dealing as the currency is strengthened. This status besides leads to increased exports and reduced imports therefore the state secures a favorable BOP place and a strong currency. High rising prices rates, as depicted in the last three months, signify a negative mark for the economic system as the degree of imports is likely to increase taking to an unfavorable BOP place and accordingly negatively impacting the exchange currency rate of the state. Inflation rates affects the operations and fiscal public presentation of Netflx. When the rising prices rates are high, the buying power of the local currency diminutions and the merchandises of Netflex besides addition. This means that the cost of similar merchandises to those of Netflix go more inexpensive in other foreign states switching the demand of their merchandises to foreign rivals. This will take to a decrease in the demand of Netfle and finally reduced grosss for Netflex. The increased rising prices may besides be reflected in increased costs of goods for Netflex. Assuming that Netflex acquires some of ite inputs including labor and other natural stuffs from foreign states, the cost of operations will lift. This is based on the diminished local currency of US based on the high rising prices rates. Netflex will necessitate high sum of the local currency to obtain other foreign currencies and be able to merchandise for inputs from their state. This will take to increased cost of operations and cost of goods. This will impact negatively on the gross net incomes and entire net net incomes realised from the operations. Another negative deduction that high rising prices may hold is on the rating of the stock for Netflex. High rising prices leads to a decrease in the currency value of the US currency and an overall state ‘s ‘ negative BOP place. During rating of stocks in the regional stock exchange or international stock markets, the above parametric quantities are taken into consideration. Hence, the value of Netflex will be lower which is a negative mark to international investors sing puting in the company. This may take to less demand for the stocks and portions of Netflex. The portion monetary value and other stocks value for Netflex could travel down due to the above negative alteration in rising prices.

The X-axis reflects the assorted months of the period under analysis ( January 2011 to June 2013 ) .

The y-axis reflects the per cent age of unemployment rates.

The above graph exhibits the unemployment degrees in the yesteryear and the prognosiss made for the six months in our anticipation. The unemployment degrees declined significantly in the twelvemonth 2011. From January 2011 to March 2011 the unemployment degrees declined somewhat by about 2 % . In April 2011 the employment degrees increased somewhat by about one per cent. From May, 2011 to December, 2011 the degrees continued worsening steadily. In the twelvemonth 2012, there was a diminution in the unemployment degrees although of a less magnitude compared to that of 2011 until April 2012. There has been no consistent tendency in that twelvemonth but the degrees have been fluctuating in that twelvemonth. The employment degree declined somewhat by about 0.3 % in January 2013 compared to December 2012. The rate has been changing by comparatively the same per cent in all the months in the prognosis period. In January 2013, the unemployment degrees reduced by 0.1 % compared to February, in February the rate are forecasted to worsen by 0.1 % and in March, the rates are expected to worsen by 0. 1 % . However, this tendency is expected to change by reversal and get down increasing. In April, the unemployment degrees are expected to lift by 1 % compared to March 2013. In May 2013, the degrees are predicted to increase by 1 % and in June 2013, the degrees are expected to increase by 1 % . The addition in the degree of unemployment implies that the buying power of the population is reduced. This is a menace to the future gross revenues of the house as the aggregative demand of the population is likely to cut down due to the reduced buying power. The addition in the degree of unemployment is of import as it may hold assorted effects on the operations of Netflix. First, based on the economic jurisprudence and keeping all things constant, the lower the demand the lower the monetary value, the cost of labor will cut down. This means that the cost of geting labor for Netflex will be down and a greater proportion of the population will be willing to work under decreased rates. This will cut down the overall cost of labor for the house cutting down the overall operation costs. This will take to an addition in the gross net income net incomes and an addition in the net net incomes of the organisation. On the other manus, the addition in the unemployment degrees will hold negative effects on the fiscal public presentation of the house. This will because the buying power of the bulk of the population will be reduced. Puting into history that the merchandises offered by Netflex are non a necessity most people will prefer to prioritize the necessities such as nutrient, vesture and shelter with their limited fiscal ability. This will take to decreased demand for Netflexs ‘ merchandises. Therefore, in the long tally, there will be a lessening in the entire gross and net net incomes from the operations of Netflex. The decrease in the gross is greater compared to the less decrease in operation costs as the proportion of the population is little compared to the figure of employees hence the addition the addition in the unemployment degrees will impact negatively on the net incomes of the organisation.

The X-axis reflects the assorted months of the period under analysis ( January 2011 to June 2013 ) .

The y-axis reflects the per cent age of nominal growing rates

The graph depicts the value of per cent alteration for the growing in the nominal GDP. The general tendency from the above graph is a worsening tendency since March 2012. In April 2011, the nominal GDP increased somewhat by about 0.1 % . The rate nevertheless declined somewhat and constitently in the following two quarters of 2011. In January 2012 the per centum alteration in the nominal increased by about 0. 5 % . In April 2012, the rate declined by about 0.6 % and the growing rate prevailed at that point until June 2012. In July 2012, the growing rate increased by approximately 0.3 % and remained changeless until September 2012. In October 2012, the growing rate declined significantly by about 0.7 % . In January 2013 the growing rate increased by approximately 0.5 % . The rate nevertheless declined by about 0.6 % in the 2nd one-fourth ( April 2012 to June 2012 ) . The growing rate increased by approximately 0.3 % in the 2nd last one-fourth ( July 201 to August 2012 ) . For the period that we are calculating, the nominal GDP rate remains changeless for the first three months ( January 2013 to March 2013 ) . In April the growing rate diminutions by 0.3 per cent and remains at this degree throughout the prognosis period until June 2013. The nominal GDP reflects the GDP before it has been adjusted for rising prices and other relevant economic parametric quantities. The diminution in the nominal GDP implies reduced economic buying power for the general population. This is likely to cut down the aggregative demand from the whole population.

The X-axis reflects the assorted different months for the period covered by the analysis ( January 2011 to June 2013 ) .

The y-axis axis reflects the per cent of mortgage rate in the period of analysis.

In our analysis, we shall presume that the rate represents the alteration in the long-run involvement rates of the American. The above graph shows the tendency of the long-run involvement rates in the American market. The general tendency is a worsening tendency in the past two old ages. The tendency has merely been increasing somewhat at really few intervals but by and large, the tendency has been worsening. In February 2011 the rate increased somewhat by 0.2 % . From March to May,2011 the rate declined somewhat by a consistent per cent age. From July 2011 to February the same twelvemonth, the rate continued worsening at a somewhat lower rate. In May 2011, the rate increased somewhat by about 0.1 % . From February 2012 to June 2012, the rate continued worsening somewhat. In July 2012, the rate increased somewhat and continued worsening. In December 2012 the rate increased somewhat by about one per cent. From January 2013 until April 2013 the rate continued lifting somewhat. In February 2013, the rate increased by 0.35 per cent compared to January the same twelvemonth. In March 2013 the rate increased by 0.3125 % compared to February. In April 2013 the rates increased by 0.495 % . In May 2013, the long-run involvement rate increased by 0.209 % . In June 2013, the long-run involvement rate declined by 0.156 % . The increasing long-run involvement rate is a negative mark to the growing of the economic system. This is based on the fact that there will be reduced borrowing from the bulk of the population therefore a decrease in the degrees of investing therefore reduced economic development. This implies decreased employment degrees and hence reduced buying power. Hence the aggregative demand and demand in the economic system which reduces and the degree of economic activity. This is a negative mark for the public presentation of the economic system and is a menace to the good public presentation of the houses in the US market. This has assorted deductions on the public presentation of Netflix. First, due to the increased involvement rates the degree of borrowing will diminish and accordingly the investing degree. There will be reduced economic activities. Due to the reduced investing and activities and economic activities, the degree of employment will cut down. This will negatively impact the buying power of bulk of the population. This will be reflected in declined demand for the company ‘s merchandises accordingly taking to cut down grosss for the company. This will cut down the net net incomes of the company. Reduced investing will besides raise the cost of inputs and stuffs for the company. This is due to the reduced handiness and limited pick for the house in geting its inputs. Therefore, the house will be forced to import some of its inputs or get them at comparatively higher monetary values from the limited providers. The footing of the statement is that competition leads to break monetary values and more effectivity in concern, keeping all other factors constant. Therefore, the costs of operation will increase. This will cut down the net income borders of the house and the net net incomes in the long tally. The higher involvement rates will cut down development and purchases of houses. The greater proportion will go on life in the rented houses. This may hold impact in both the short tally and in the long tally. In the short-run, the demand will increase. This is based on the fact that bulk of the population will be holding a batch of money to pass as they have less commitment towards serving the loan. This is likely to increase their ingestion and may hence they may direct a proportion of their ingestion to the merchandises of Netflix. This will take to an addition in the net incomes of Netflex.

The X-axis reflects the assorted different months for the period covered by the analysis ( January 2011 to June 2013 ) .

The y-axis axis reflects the degree of exports, which are in one million millions of US dollars.

The above graph the existent and forecasted export for the Us market. The degree of exports is a important constituent in finding the BOP place, which has important deductions in the economic operations of the state. During the first one-fourth of 2011, the degree of exports increased by around 4 % . During the 2nd one-fourth of 2011, the degree of exports further rose by about 3 % . In the 3rd one-fourth of the same twelvemonth, the degrees rose by about 1 % . In the 4th one-fourth of 2011, the exports declined somewhat by less than one per cent. In January 2012, the degrees of exports increased somewhat by 1 % and the degree remained changeless over that period. In the 2nd one-fourth of 2012, the degrees of exports increased somewhat by about 1 % . During the 3rd one-fourth, the degrees of exports increased somewhat by less than 1 % . In the last one-fourth of 2012, the import degrees declined by about 1 % and remained at that degree until January 2013. In February 2013 the degree of imports declined by about 1 % . In February 2013 the degree of exports declined somewhat by about 1 % . The prognosiss depict a negative indicant for the economic system of the state. A diminution in the state ‘s ‘ export connote a decrease in the demand of the Us merchandise in the international market. This tendency leads to an unfavorable balance of payment, which is unsuitable for economic advancement, and operations of houses in the state. This macro-economic parametric quantity is of import as it affects the fiscal public presentation of Netflix. First, when the degree of exports decreases the BOP place of the state will be affected negatively. This will weaken the local currency of the state. This implies that when Netflex is importing its imports it incurs more to change over the dollar into other currencies therefore the imports become more expensive. This increases the cost of inputs and cost of goods for Netflex. This translates to cut down gross net incomes and net net incomes. Second, it reduces the sum of net incomes realised on exports sold by Netflex. Since the dollar currency has weakened in comparing to other currencies, the gross revenues of Netflex after interpreting them to Us dollar currency are significantly lower. This reduces the net income realised by Netflix. Another consequence of the lessening in the degree of exports is that the state ‘s merchandises become cheaper to other states increasing their demand. When the degree of exports reduces and the BOP place is unfavorable, the currency weakens as explained earlier. This attracts consumers from other foreign states with stronger currencies compared to the US as the goods are cheaper from their position. This leads to increased degree of demand for Netflix interpreting to increased grosss and net net incomes in the terminal.

The X-axis represents the months of the period of our analysis.

The Y-axis represents the degree of imports of goods and services in Us in 1000000s of dollars.

The graph shows the past tendency of the US imports and the prognosiss for the same in the six months period. In the 2nd one-fourth of 2011 ( April to June 2011 ) , the exports increased by approximately 2 % . In the 2nd last one-fourth of the same twelvemonth, the import degrees increased somewhat by less than 1 per cent. In the last one-fourth of this twelvemonth ( October 2011 to December 2011 ) , the imports increased somewhat. In the first one-fourth of 2012, the imports increased somewhat farther by about one per cent. In the 2nd one-fourth of 2012 ( April to June 2012 ) , the imports increased by a really minor per cent age. In the 3rd one-fourth of the same twelvemonth get downing from July, the imports declined somewhat by 1 % . In the last one-fourth of the twelvemonth ( October 2012 to December 2012 ) , the imports addition somewhat by a really little per cent. By and large, the rate has been fluctuating up and down in the past two old ages. Harmonizing to our prognosiss, the imports will worsen somewhat in the first one-fourth of 2013 by about one per cent.

In the 2nd one-fourth of 2013, the imports will go on worsening farther by a little difference of about one per cent. The way of imports is important as it affects the economic conditions. An addition in the imports is unfavorable for any economic system as it affects the currency of a state negatively and leads to its weakening. A high degree of imports implies that the demand for goods produced by other states is higher than the demand for goods supplied locally. This reduces the aggregative demand for the local production. An addition in the degree of imports besides affects the balance of payment place for a state negatively. Our above prognosis hence portrays a positive mark refering the demand for goods produced by the American industry. The lessening in the degree of imports has several deductions on the fiscal public presentation of Netflix. The lessening in the degree of exports will take to a favorable BOP place and accordingly the strengthening of the Us currency. This will enable Netflix to get its imports of natural stuffs and inputs from other foreign states more stingily. This will take to decreased costs of natural stuffs and costs of goods for Netflix. This will take to increased gross net incomes and finally higher net net incomes for Netflix. Second, it leads to increased gross for Netflix in instance of foreign gross revenues. This is because once it translates its gross from foreign trade utilizing its stronger currency, the value realised after the interlingual rendition will be higher. This translates to higher gross net incomes and higher net net incomes in the long-run.

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