Macroeconomic Performance and Strategic Decisions Essay - 1

Macroeconomic Performance and Strategic Decisions - Essay Example Kazakhstan is an emerging economy in Central Asia and is one of the former Soviet republics. Each of these countries would be analysed on four main areas. The analysis would outline the four parts of this paper. Part one is a summary of the macroeconomic performance of each country over the last three years (2004-2006). Part two is a critical evaluation of the economy as a target market for exports. Part three is a critical examination of advantages and disadvantages of the economy as a potential source of inputs into a manufacturing company. Part four is an analysis of the strengths and weaknesses of the economy as a location for foreign direct investment or FDI. Table 1 summarises key economic indicators for these countries. The researcher acknowledges the sources in the Bibliography. The UK, with a total GDP of $1.8 trillion growing 3.1% annually is the world's fourth largest economy and has a population of 59 million with high disposable incomes, making it one of the best gateways to penetrate European markets with a per capita income of $30,447 at purchasing power parity. This former world superpower is the world's 6th freest (of 155) economy (Heritage, 2007, p. 381), the 10th (of 125 countries) most competitive nation on earth (World Economic Forum, 2006, p. xvii), and the world's 21st most competitive economy, which includes sub-economies that are not states or countries like Catalonia in Spain (IMD, 2006, p. 7). The Monetary Policy Committee (MPC) of the Bank of England (BOE) keeps a close look at the inflation rate that is only slightly rising between 2 and 3% annually by monitoring interest rates (BOE, 2007). The U.K. uses two inflation measures: the Retail Price Index (RPI) and the Consumer Price Index (CPI). Both are similar but with minor differences in composition, coverage, and weighting of prices in the index. Since December 2003, the CPI has been used for monetary policy with a target of 2.0% on average over time (BOE, 2007). The sterling exchange rate remains strong against the U.S. dollar and stayed within the range of 0.58 to 0.53 by end-2006. The sterling weakened against the Euro as expected from 0.69 to 0.72 by end-2006, a trend expected to last until end-2007 depending on Eurozone interest rates changes. These currency movements were affected by the weakening of the U.S. economy and a strengthening Eurozone with respect to the UK, signifying low currency volatility due to sterling's lack of attractiveness as a medium for short-term capital flows in currency markets caused by the UK's flat interest rate curve (BOE, 2007, p. 2). The UK stock market continued to rise, returning 22.0% up to December 2006, continuing a two-year trend, with the FTSE 100 index closing higher by end-2006. The UK equities market is expected to follow its upward trajectory in 2007 on the back of stable prices and renewed business and consumer confidence. Hong Kong Special Administrative Region (HK SAR) The HKSAR celebrated last July 1, 2007 its tenth anniversary since its handover by the UK to the People's Republic of China. HKSAR retains its unique status as a Special Administrative Region until 2047 and hopes to remain as the world's most liberal capitalist economy whilst at the same time being a part of the largest and most progressive Communist nation with