7.1 How do you analyse an economy?

The million dollar question is this: how do we go about analysing an economy? The working and dynamics of an economy can be systematically analysed based on the steps outlined below. However, as an investor we have to understand that these steps are mutually interdependent. For example, indicators give us an insight about the economic cycle of the country. In a similar way, economic policies directly impact the economic indicators of the country. The following dimensions will give us an insight into the overall health of an economy for investment:

1. Economic cycles
2. Economic indicators
3. Economic policies