Digital payments to boost GDP

“Overall, we calculate that widespread use of digital finance could boost annual GDP of all emerging economies by $3.7 trillion by 2025, a 6 per cent increase versus a business-as-usual scenario,” McKinsey said in its report ‘Digital Finance For All’. Detailed inputs from field research in seven emerging economies that cover a range of geographies and income levels was carried out, the report said.

“Nearly two-thirds of the increase would come from raised productivity of financial and non-financial businesses and governments as a result of digital payments. One-third would be from the additional investment that broader financial inclusion of people and micro, small, and medium-sized businesses would bring,” it said. “The small remainder would come from time savings by individuals enabling more hours of work.” 

With the increased use of digital payments, governments could gain $110 billion per year from reduced leakage in public spending and tax collection -- money that could be devoted to other priorities. The resulting increase in aggregate demand could create nearly 95 million new jobs across all sectors, it added.