The Long Run Impact of Exchange Rate and Inflation on GDP: A Panel Data Approach Consistent with Data from Brazil, Russia, India, China, And South Africa (BRICS)

Abstract

The study seeks to address current discrepancies, providing valuable knowledge for decision-makers, fostering economic stability and expansion, informing global economic trends, assisting in business risk mitigation, and contributing to academic advancement through methodological innovation, with a focus on the changing nature of global economic dynamics. The purpose of this study is to assess how inflation and currency exchange rates affect the GDPs of the BRICS (Brazil, Russia, India, China, and South Africa) nations between 1998 and 2022 We employed a fixed-effect panel data model using EViews software to conduct a thorough regression analysis on the influence of exchange rates and inflation on the Gross Domestic Product (GDP) of the BRICS nations. The World Development Indicators website provides data that shows that, in contrast to predictions, exchange rates have no appreciable impact on GDP. Nonetheless, during the given time frame, inflation turns out to be a noteworthy and positively connected element impacting these countries' economic growth. This research contributes to the current understanding by uncovering the complex interconnections between exchange rates, inflation, and GDP in BRICS economies. Our findings highlight the necessity of customized economic strategies that recognise the distinct functions of inflation and currency rates in influencing the long-term growth patterns of individual countries.