10.24.07

What are some warning signs of a change in the economy and exchange rate?

Posted in Economic Analysis at 4:07 am by Administrator

One of the most common international business mistakes is to underplay the economy of the target country. You can have a great product, marketing strategy and local partners, but, if the exchange rate changes against you, the product becomes too expensive and nobody buys it.

How can you protect yourself? Having had to quickly become an expert in various economies around the world, I give particular attention to the following:

(you can find this information in the Economist Intelligence Unit country reports or the IMF statistics.)

• changes in commodity prices for the country’s principal exports
• sharp increases in the country’s budget deficit
• increase of inflation rate (and in certain cases an abrupt deflation)
• high levels of debt service (interest payments to exports)
• sharp increases in domestic interest rates.
• an increase in assets held by nationals outside of the country

What indicators do you follow?

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