The Global Economy and International Money Transfer

The global economy has certainly taken a massive hit from a few events that took place in recent years. Compounding the damage from the Covid-19 pandemic, the Russian invasion of Ukraine has magnified the slowdown in the global economy: which is entering what could become a protracted period of feeble growth and elevated inflation, according to The World Bank’s latest Global Economic Prospects report. Global growth is expected to slump from 5.7 percent in 2021 to 2.9 percent in 2022 significantly lower than the 4.1 percent that was anticipated in January (The World Bank). On the contrary, raising the risk of the stagflation, with potentially harmful consequences for middle and low-income economies alike.

Foremost, we start off with the global economy and what to expect. The current state of the economy is expected to hover around a similar pace from 2023 to 2024 as the war in Ukraine disrupts the activity, investment, and trade in the near term. As a result of the damage from the pandemic and the war, the level of per capita income in developing economies this year will be nearly 5 percent below its pre-pandemic trend. However, the current juncture of stagflation resembles the one that took place in 1970 in 3 key aspects. Stagflation is defined as persistently high inflation combined with high unemployment and stagnant demand in a country’s economy. Firstly, there is a persistent supply-side disturbance fuelling inflation, preceded by a protracted period of highly accommodative monetary policy in major advanced economies. Secondly, there are also prospects of weakening growth. Followed by vulnerabilities that emerging market and developing economies face with respect to the monetary policy tightening that will be needed to rein inflation.Additionally, global inflation is expected to moderate next year but will likely remain above inflation targets in many economies.

Moreover, inflation essentially affects the economy by affecting the exchange rate between two nations.The rate of inflation in a country can have a major impact on the value of the country’s currency and the rates of foreign exchange with the currencies of other nations. However, inflation is just one factor among many that combine to influence a country’s exchange rate. Inflation is more likely to have a significant negative effect, rather than a significant positive effect, on a currency’s value and foreign exchange rate. Additionally, a very low rate of inflation does not accustom to a favourable exchange rate for a country but an extremely high inflation rate is very likely to impact the country’s exchange rates with other nations negatively.

Exchange rates, however, do play an important role in the country’s economy. They are relative, especially in the modern world of fiat currencies where virtually no currencies have any intrinsic value. The only value any country’s currency has is its perceived value relative to that of other countries or its domestic purchasing power. This situation can influence the effect of the input such as inflation and subsequently the country’s exchange rate. As such it is always important to pick companies and businesses that offer the most effective exchange rate to carry out purchases, investments, money transfers, and more. Here at Lotus Remit,it is taken into account the global economic status and gives the best rates accordingly. This allows customers to not lose more money in transaction fees and so forth. Transaction fees and all the services provided are completely transparent, the payment which will not lead to any unanticipated additional charges. Alongside that, Lotus Remit guarantees a completely safe and secure service.

Amid the current global economy, it is important to make wise decisions relating to matters concerning exchange rates as the economy is moving into stagflation worldwide. On the other hand, it’s essential to not be ignorant about losing cash for unconventional matters and processing fees. With a wide exchange difference between certain countries, a small mishap might cost big bucks. On a final note, the global economic status does affect the exchange rates on a large scale and the exchange rates can be speculated by the occurrence of any significant economic event to a certain extent.