Measuring the Impact of External Debt on the Macroeconomic Indicators of Asian Countries

Shoaib Anwer Qambrani; Israr Ahmed; Abdul Basit

doi:10.52633/cdxraq77

Authors

Shoaib Anwer Qambrani Independent Research Scholar Author
Israr Ahmed Ilma University, Karachi, Pakistan Author
Abdul Basit KASBIT, Karachi, Pakistan Author

DOI:

https://doi.org/10.52633/cdxraq77

Keywords:

External Debt, Inflation Rate, GDP Growth Rate, Trade Dynamics, Exchange Rate

Abstract

The relationship between external debt and several macroeconomic variables over the long run in three Asian nations is examined in this study. We utilized 10 years of data from the World Development Indicators (WDI) databases to conduct an ordinary least squares (OLS) regression analysis using EViews 13 to investigate the effect of external debt on macroeconomic indicators. The results of this study show that these three countries differ in macroeconomic factors that are significantly impacted by external debt. External debt affects the exchange rate directly and significantly in all three of the countries, but Sri Lanka has the biggest impact. The findings show a positive and statistically significant correlation between rising rates of inflation, particularly in Pakistan, and rising amounts of external debt. A higher level of foreign debt has a positive impact on the trade dynamic in Sri Lanka, while it causes detrimental effects for Pakistan and Bangladesh. External debt has a negative effect on Bangladesh and Sri Lanka and a favourable effect on Pakistan's GDP growth rate. The findings have significant implications for economists and policymakers, suggesting that national debt management plans should be tailored to individual countries. Subsequent investigations ought to go deeper into these aspects and contemplate supplementary metrics to comprehend the influence of external debt on macroeconomic stability.

Author Biographies

Israr Ahmed, Ilma University, Karachi, Pakistan

Associate Professor, Ilma University, Karachi, Pakistan
Abdul Basit, KASBIT, Karachi, Pakistan

Lecturer, KASBIT, Karachi, Pakistan

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