Implications of Global Macroeconomic Shocks on Digital Financial Services

LightCastle Analytics Wing
November 14, 2023
Implications of Global Macroeconomic Shocks on Digital Financial Services

The “Impact of Global Macroeconomic Shocks on Digital Financial Services” report delves into the implications of global economic shocks on the digital financial services (DFS) sectors across focus countries in Asia and Africa. Through in-depth analysis and data-driven insights, the report aims to shed light on the vulnerabilities and growth opportunities in this critical sector, amidst challenging economic conditions.

The past few years have been marked by substantial global challenges, including the Covid-19 pandemic and the Russia-Ukraine war. These events have led to a significant economic downturn, with a sharp decline in global GDP growth from 6% to 3.1% between 2021 and 2022. Additionally, trade disruptions and sanctions have driven inflation to 8.3% in 2022. Major economies like the USA, UK, and EU have adopted cautious monetary policies in response, further impacting the financial system. The global financial system faced vulnerabilities, leading to the near-collapse of three major banks. Investors sought refuge in safer US-based assets, significantly boosting demand for the US dollar. This appreciation of the dollar, which constitutes 40% of the global market, has had a ripple effect on focus countries and the DFS sector.

Implications of Global Macroeconomic Shocks on Digital Financial Services

Local currencies in focus countries across Asia and Africa experienced rapid depreciation against the US dollar. Coupled with rising global commodity prices, this resulted in increased import costs. Simultaneously, a decline in global export demand due to recessionary phases in the USA and EU impacted the forex reserves of countries like Pakistan, Bangladesh, Uganda, and Tanzania. Inflation surged, with an average six-month rate of 29.4% in Pakistan and 18.7% in Nigeria in 2023. Credit ratings for countries like Bangladesh, Kenya, Uganda, and Pakistan were downgraded, necessitating IMF support.

For further details, download the full report below to read more about the macroeconomic challenges that have taken place this year and how it has affected the DFS sector in focus countries.

Implications of Global Macroeconomic Shocks on Digital Financial Services If you are interested to learn more Document download full report

This report, funded by the Bill & Melinda Gates Foundation, has been jointly prepared by Big Cabal Media, Invest2Innovate, Larive International, LightCastle Partners, PT Clarity Research, and Sannam S4 Ltd. The findings and conclusions contained within are those of the authors.

Learn more about our collaboration with the Bill & Melinda Gates Foundation here.

WRITTEN BY: LightCastle Analytics Wing

At LightCastle, we take a data-driven approach to create opportunities for growth and impact. We consult and collaborate with development partners, the public sector, and private organizations to promote inclusive economic growth that positively changes the lives of people at scale. Being a data-driven and transparent organization, we believe in democratizing knowledge and information among the stakeholders of the economy to drive inclusive growth.

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