Why Is It Important To Understand The Concepts Of Inflation

Why Is It Important To Understand The Concepts Of Inflation Present

Why is it important to understand the concepts of inflation, present value, and future value of money as Saudi Arabia moves towards Saudi Vision 2030? What are some of the important terms and concepts that managers must understand in making decisions in today’s global environment? How will these factors affect Saudi Vision 2030? Search the Internet for an academic or industry-related article. Select an article that relates to these concepts and explain how it relates to doing business in Saudi Arabia.

For your discussion post, your first step is to summarize the article in two paragraphs, describing what you think are the most important points made by the authors (remember to use citations where appropriate). For the second step, include the reference listing with a hyperlink to the article. Do not copy the article into your post and limit your summary to two paragraphs. Let your instructor know if you have any questions and enjoy your search. You are required to reply to at least two peer discussion question post answers to this weekly discussion question and/or your instructor’s response to your posting.

These post replies need to be substantial and constructive in nature. They should add to the content of the post and evaluate/analyze that post answer. Normal course dialogue doesn’t fulfill these two peer replies but is expected throughout the course. Answering all course questions is also required. Required sources include Hanif (2019), Keffala (2020), Soualhi (2017), and the Saudi Arabia: The Kingdom of Saudi Arabia's new commercial mortgage law of 2018 by STA Law Firm (2019).

Paper For Above instruction

As Saudi Arabia accelerates its economic diversification efforts under Saudi Vision 2030, understanding fundamental financial concepts such as inflation, present value, and future value of money becomes critically important for effective decision-making. This is particularly relevant given the country’s strategic shifts towards a knowledge-based economy, increased foreign investments, and modernization of financial institutions and real estate markets. These concepts enable policymakers, investors, and business managers to evaluate the sustainability of economic growth, assess investment opportunities, and mitigate financial risks amidst fluctuating global economic conditions.

Inflation, as a key economic indicator, influences purchasing power, costs of goods and services, and overall economic stability. In the context of Saudi Vision 2030’s ambitious goals, a nuanced understanding of inflation helps in designing policies that foster a stable economic environment conducive to growth. It directly impacts the valuation of assets, pricing strategies, and wage adjustments, which are vital for attracting foreign direct investment and developing local industries. Moreover, inflation expectations influence monetary policy decisions, which are crucial for maintaining currency stability and controlling inflationary pressures, especially in a country with substantial oil dependence transitioning toward non-oil sectors (Hanif, 2019).

Present value and future value calculations are essential tools for businesses and government entities to evaluate investment projects, manage risks, and plan capital allocations. In the Saudi context, applying these financial concepts helps in determining the viability of large-scale infrastructure projects, real estate developments, and public-private partnership initiatives aligned with Saudi Vision 2030. Accurate valuation and discounting are imperative for informed decision-making amid the country’s evolving economic landscape. For instance, Islamic banking institutions utilize principles related to the time value of money, such as the use of profit-sharing mechanisms and sharia-compliant financing instruments, which are tailored to support sustainable economic growth within the Islamic Finance framework (Keffala, 2020).

Managing these financial concepts effectively allows Saudi Arabia to attract diversified investments, reduce financial risks, and facilitate sustainable development. Knowledge of the time value of money also helps in understanding the implications of monetary policies and fiscal measures implemented to combat inflation, stabilize the economy, and promote fiscal discipline. As the country reforms its financial markets and augments its global trade links, these fundamental economic principles will serve as essential tools for managers and policymakers striving to balance growth with financial stability, ultimately supporting Saudi Vision 2030’s objectives for economic diversification and social development.

References

• Hanif, M. (2019). Islamic mortgages: principles and practice. International Journal of Emerging Markets, 14(5).
• Keffala, M. R. (2020). How using derivative instruments and purposes affects performance of Islamic banks? Evidence from CAMELS approach. Global Finance Journal.
• Soualhi, Y. (2017). Challenges of developing a takāful retirement annuity plan in Malaysia. ISRA International Journal of Islamic Finance, 9(1), 95-99.
• STA Law Firm. (2019). Saudi Arabia: The Kingdom of Saudi Arabia's new commercial mortgage law of 2018. Retrieved from https://www.stalawfirm.com