The Global Economy Explained: GDP, Inflation, Interest Rates and Trade

The global economy is a network of national economies linked through trade, investment, finance, energy and technology. A change in one major economy can affect businesses and households far beyond its borders.

GDP and Economic Growth

Gross domestic product measures the value of goods and services produced within an economy over a period. Growth indicates expansion, although GDP alone does not measure inequality, environmental quality or wellbeing.

Inflation and Interest Rates

Inflation is a broad rise in prices that reduces purchasing power when incomes do not keep pace. Central banks use interest rates and other tools to influence demand and inflation.

Trade and Capital Flows

Countries trade goods and services while investors move capital across borders. These flows can support growth but can also transmit financial stress from one market to another.

Why Global Shocks Spread

Energy prices, wars, financial crises, pandemics, supply disruptions and natural disasters can affect production and prices across countries.