A Study on Predictors of GDP: Early Signals

Financial Architecture aims sustainability of an economy by ensuring consistent growth rate.GDP is an indicator of the growth of an economy. Higher GDP of an economy reflects robust growth of an economy and vice-versa and as such every country tries to maximise the growth rate of GDP .There are certain macro factors operating in the economic environment that will influence the GDP growth rate. The study makes an attempt to determine the influence of selected economic variables namely Inflation, Exchange rate, Foreign exchange reserves, FII's, Sensex, Balance of Payments and Current Fiscal Deficit on the GDP of an economy. The data is collected by using secondary sources relating to the selected Economic variables. The data is collected for a period of 15 years i.e. from 01-04-1997 to 31-03-2012 with annual intervals. The scope of the study is confined only to selected economic variables only. Correlation and ANOVA are used for analyzing the relationship between the GDP and selected economic variables. The study revealed that Exchange rate, Sensex and Balance of Payment reflected by current and capital account balances are the factors that significantly predict GDP of the economy.