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Economists analyze individual country economies to detect global business cycle changes. Developed and emerging markets are separated by their economic state. GDP is used to determine individual economy expansion and assign a growth rate to the global economy, revealing the type of global business cycle.
Economists tend to review activity in individual country economies to recognize signs of change in a global business cycle. The influence that each country’s economy has on an economic cycle varies in part according to the deposit that each nation makes to the overall global economic picture. The economies of developed nations could be considered together, while the influence of emerging markets could represent another market segment. Global economists often use indices to identify trends in the business cycle. Sometimes, they recognize a change in trend once that period has already passed.
By assigning different weights or percentages to influential countries in the world economy, economists can build a global perspective on the state of large markets. Countries can be separated by the developing state of the economy, ranging from a select few advanced nations, to developed nations, and finally to those with emerging markets. Emerging economies may sometimes be the fastest growing regions, but this is largely because there is still a lot of development to come.
A global business cycle could be dramatic, representing boom times where markets have peaked, a trough where there is a sharp contraction, and different phases in between. While a typical global business cycle takes place over a period of about a decade, give or take several years, and is susceptible to shorter terms, it is possible for a cycle to repeat itself. If the global economy enters a recession, there may be signs that the downturn is over and markets are recovering. A double-dip recession, however, would suggest that the cycle is determined to repeat itself. Economists can label this condition in a number of ways, from separating each individual recession to determining that the initial global economic cycle never truly ended.
Gross domestic product is a measure that economists use to determine the expansion that could occur in individual economies. Based on these rates, and again by exerting a different influence on countries based on an economy’s status, market participants are able to assign a growth rate to the global economy. That rate should reveal the type of global business cycle that world economies have gone through over different time periods. Economic expansion data is also used to create forecasts about upcoming global economic cycles. As historical data is revised, however, even these projections may be subject to change.
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