The Effects of Global Inflation on Economic Growth in Emerging Economies

Abstract

Global inflationary pressures can constrain economic growth in emerging economies through imported costs, exchange-rate movements, tighter financing conditions, and losses in purchasing power. This narrative review synthesizes eleven academic and institutional sources published between 2003 and 2026 to examine these mechanisms, the nonlinear relationship between domestic inflation and growth, and the performance of inflation-targeting regimes. The literature suggests that high inflation is often associated with weaker growth, but estimated thresholds depend on country coverage, inflation measures, and econometric specifications. Findings on domestic inflation do not, by themselves, identify the causal effect of an external price shock. Evidence on inflation targeting is more consistent for price and output stabilization than for sustained increases in average growth. Institutional credibility, fiscal conditions, and exposure to international markets help explain differences across economies. The review argues for a context-sensitive policy response that distinguishes temporary imported price pressures from persistent domestic inflation. Its conclusions remain subject to the limitations of a selective narrative synthesis and the predominantly pre-pandemic observation periods of several underlying studies.