6.2 The economic climate GapFill

The economic climate is important to small business because different economic factors will have different impacts on consumer  profitsmoneyrevenueincomes, and this might change the goods and services that customers buy.

One economic indicator that has a large impact on business is GDP (gross domestic product) growth, and the rate of GDP growth measures how well the economy of a country is  gettinghavingdoingperforming. GDP adds up the total value of goods and services produced by a country in one year. If GDP growth is increasing, then the economy is expanding, which is good for business. GDP growth means that companies will hire more staff and be able to afford to pay higher wages, which in turn increases consumer  spendingwantingneedingliking.

Another important economic indicator is  workingunemploymentidlenessjobs. If levels are high in a country, then there are a lot of people out of work, and this will mean lower consumer income levels, which will reduce spending on goods and services in businesses and, therefore, have an impact on sales. However, low unemployment levels may make it harder for employers to recruit suitable  expertsstaffsupplierssubcontractors and consequently they may need to offer higher  benefitswagesdiscountsstandards to encourage them to move from another employer. 

Changes in  awarenessconcentrationdisinterest ratesinterest rates can also impact business. This is the cost of  plagiarisingcopyingborrowingpirating, and if it increases, then customers will be unable to spend on more expensive goods and services which require loans and mortgages, e.g. holidays, houses and cars.