Global economic outlook
- the global economic outlook refers to :: the projected changes to the level of economic growth throughout the world.
- If the outlook is positive:
- increasing demand for products and services → businesses need to increase production to meet demand → requires more funds
- decreased interest rates on funds borrowed internationally
- because of a decrease in the level of risk associated with repayments
- ^^ Vice versa if the outlook is negative
Availability of funds
- The availability of funds refers to :: the ease with which a business can access funds (for borrowing) on the international financial markets
- The international financial markets have a range of institutions willing to lend money overseas
- conditions and rates apply, based primarily on:
- risk
- demand and supply
- domestic economic conditions.
Interest rates
- Interest rates are :: the cost of borrowing money.
- a ==higher risk== (chance of being unable to repay) involved in lending to a business
- leads to higher interest rates
- Australian interest rates tend to be above those of other countries
- Therefore tempting Australian businesses to borrow finance from overseas
- this poses the additional risk of exchange rate movements