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p. 4 of 14 BACK | NEXT Introduction Part I: Scope of Project Economic Analysis Part II: The 10 Areas of Analysis 1. Assess Macroeconomic Context 2. Assess Sector Context 3. Assess Demand 4. Identify Economic Rationale 5. Identify Project Alternatives 6. Identify and Compare Benefits and Costs 7. Assess Financial and Institutional Sustainability 8. Undertake Distribution Analysis 9. Undertake Sensitivity and Risk Analysis 10. Establish a Project Performance Monitoring System (PPMS) Part III: Areas of Analysis in ADB's Project Processing Cycle

Key Areas of Economic Analysis of Projects : Part II: The 10 Areas of Analysis

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Assess Macroeconomic Context

• Review recent economic performance including key trends sources of growth to identify sector needs for improving growth potential.
• Assess macroeconomic policies, issues, and indicators such as debt levels, balance of payments, inflation, exchange rate movements, and public financial management as related to the target sector and area.
• Assess economy-wide structural policies that may affect market functions and service provision to the target sector, including trade, financial, labor, and governance structures.
• Assess economic outlook and projections for key indicators critical to sector and project performance.
• Assess critical linkages, and assumptions that affect target sector performance and possible investments, including feedback mechanisms and effects from the sector to the macro economy and other sectors.
• Estimate country-wide economic parameters such as standard conversion factors or shadow exchange rate factors.

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