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Impact of GDP Growth and CPI Inflation?

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How does (or should) expected GDP growth and CPI inflation impact your investment decisions?

For example, if inflation is expected to significantly increase in a certain emerging market, would it be advised to invest in that specific emerging market or avoid it?

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  • +1 Votes Thumb up 1 Thumb down 0

    lrgche on May 31, 2010

    Pinyo, thanks for your answer, which is right on for the US and inflation protection, but I was specifically referring to the inflation IN an emerging market, inflation outside the US and how that would impact investing choices, as in moving into or moving out of that particular emerging market.



  • +1 Votes Thumb up 1 Thumb down 0

    Pinyo on May 31, 2010

    If you believe that inflation is expected to increase significantly, there are several things that you could do:

    1. Buy inflation-protected securities, such as Treasury Inflation Protected Securities (TIPS)
    2. Invest in real estate. Real estate price has inflation protection built in, and your montly mortgage payment becomes “cheaper” since you pay the same amount that’s worth less.

    As far as how investing in emerging market helps you with inflation, I don’t know.


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