Next week, our eyes will be on the economic growth reports. Data on gross domestic production will be especially important from North America and Great Britain. The European Union will publish an inflation report which will allow investors to estimate the future actions of the European central bank.
What is gross domestic product (GDP)?
By definition, GDP is nothing more than the sum of all goods and services produced by the economy in a given period.
In practice, it is of greater importance. It gives us some idea of where the national economy is going we can determine whether the economy is developing and how fast. Moreover, it enables analysts to compare countries economically. However, it should not be treated as a hard economic indicator, because there are many gaps in this method of "measuring the economy". Yet all governments use it, and they also do it for purely psychological purposes. What I mean here is the impact on consumer behavior and the well-being of the financial markets.
The disadvantage of this indicator is that GDP alone has little to do with measuring the level of wealth of the citizens of a given country, and thus their quality of life. If GDP itself were a precise measure of welfare, countries such as China or India, where the Gross Domestic Product has been able to achieve a double-digit result in recent years, would long ago become havens for their citizens.
Another major drawback of GDP is that it does not take into account the so-called In addition, the GDP indicator does not take into account the production in the shadow economy, but it does take into account the expenditure on loans, without taking into account that in the future consumers or entrepreneurs will pay them back, which will have a negative impact on their budgets.
Canada releases the Gross Domestic Product (GDP) MoM report on Thursday. Although GDP was positive in the previous months, it continued to decline. This decline has been taking place since April, i.e. it has been rising earlier since March. Canada's economy is expected to fall into recession with negative results (-0.1%).
U.S. Gross Domestic Product (GDP) QoQ
On Thursday America also releases Gross Domestic Product data but for a different period. The GDP QoQ in the US, as shown in the chart, was recorded since May. Interpreting the GDP data, we can conclude that the US economy is struggling with a recession, but as we can read from the available data, the Fed's actions help to restore the positive GDP level. Although the GDP Q2 forecasts show a negative level (-0.6%), it is a positive expectation as the previous Q1 reading was at -1.6%.
U.K. Gross Domestic Product (GDP) QoQ And YoY
A day after the data from North America, Great Britain also publishes data on gross domestic production. The Office for National Statistics (ONS) did not publish expectations as to the level, but after the latest macroeconomic reports we can expect the recession on the island to deepen. The latest quarterly Q1 reading was positive, but the monthly GDP levels are down and in August it was read at -0.1%.
U.K. Gross Domestic Product (GDP) YoY is more optimistic. Although it has not reached its negative level yet, it continues the downward trend. The latest reading showed GDP YoY at 2.9% and now we can expect it to be close to 2% rather than 3%.
Eurozone Consumer Price Index (CPI) YoY
On Friday, Eurostat will publish data on the change in the price of goods and services from the perspective of the consumer YoY. As already published reports show, the situation in the European Union is deteriorating. The latest Consumer Price Index report showed a positive inflation result as we managed to keep the next month at the same level of 9.1%. Despite the fact that we managed to keep the level, the inflation expectations for the current period show that the level will increase to the level of 9.6%.
These are just a few of the important information that will come out next week. We can expect that not only North America and Europe will publish reports that may affect the situation on the forex market.