IMF World Economic Outlook Research Articles

AN ANALYSIS ON THE ROLE OF STOCK BROKERAGE HOUSES IN COMMUNITY DEVELOPMENT

This study investigates the role of stock brokerage houses in community development within the context of Bangladesh's capital market. Data and information are sourced from a variety of secondary sources, encompassing financial platforms like the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE), credible news websites such as Investing.com, published literature, and official reports from regulatory authorities such as the Bangladesh Bank and the Bangladesh Securities and Exchange Commission (BSEC). Quantitative data spanning the period from 2010 to 2019 are meticulously extracted from stock exchange databases as well as the IMF World Economic Outlook database. These datasets are meticulously structured and analyzed using tables, charts, and graphs. Amidst challenges such as market collapses and the COVID-19 pandemic, the resilience and growth of Bangladesh's capital market are evaluated. The results reveal that brokerage houses have a significant impact on community development in Bangladesh. For instance, the total traded volume reached Tk. 2,169,597 million in 2017, marking an 82.08% increase from the previous year. Sector-wise turnover data showed consistent investment trends, particularly in manufacturing, financials, and pharmaceuticals. These investments have led to job creation and infrastructure development, highlighting the role of brokerage houses in fostering employment and socioeconomic advancement. Additionally, the adoption of online trading platforms has driven technological advancement and financial inclusion. The findings of this study suggest that brokerage houses are crucial intermediaries in the capital market, contributing to economic growth, financial inclusion, and community development through their investment activities and corporate social responsibility initiatives.

Is there hysteresis in potential output estimates?

Using an error correction model, this paper studies the dynamics of GDP and potential GDP using OECD's Economic Outlook and IMF's World Economic Outlook estimates of the output gap. The findings suggest the presence of hysteresis, implying that short-run shocks to GDP have sizeable permanent effects on potential GDP.

COMMUNICATION OF THE CENTRAL BANK AS A DETERMINANT OF THE CREDIBILITY AND EFFECTIVENESS OF THE MONETARY POLICY ON THE EXAMPLE OF THE EUROPEAN CENTRAL BANK

The aim of the undertaken research is an attempt to explain, on theoretical and empirical grounds, the interdependence between central bank communication, its transparency credibility and,consequently, the effectiveness of monetary policy pursued by central banks. The study used research methods based on the literature analysis on the subject in the field of banking and finance, as well as statistical and econometric methods (Granger causality analysis and the generalised linear model – GLM). Literature studies are aimed at answering the question of what is the relationship between the transparency, credibility of the central bank and the effectiveness of monetary policy in theoretical terms. However, the empirical research studies aim to confirm the hypothesis (H0) or reject the hypothesis (H1) about the causal relationships between the variables mentioned. Empirical analyses were conducted on the example of the European Central Bank, which, from the point of view of its monetary policy, is characterised by relatively high efficiency, relatively effectively stabilising inflation in the monetary union. All statistics used in the study were taken from databases of the International Monetary Fund (IMF World Economic Outlook), the European Union statistical office (Eurostat) and the Organisation for Economic Cooperation and Development (OECD) (OECD Data). The analysis covers the period from 2010 to 2022 based on monthly data. The results of the research confirmed the existence of the null hypothesis (i.e., the significant impact of communication, transparency and credibility of the European Central Bank on the effectiveness of monetary policy in the Euro area). The results of the conducted research may be a starting point for further, more in-depth research on the relationship between communication, transparency, credibility and effectiveness of central banks in countries with different levels of economic development.

Do the macro and global economic factors drive the nonperforming loans in GCC economies?

Purpose The current study aims to investigate the determinants of nonperforming loans (NPLs) in the GCC economies during the period spanning 2000 to 2018. It also examines whether the worldwide financial crisis of 2007–2008, which brought the issue of non–performing loans to the greater attention of academics and policymakers, had a substantial impact on NPLs in this region. Design/methodology/approach The sample consists of 53 conventional banks from GCC countries, and the basic data for the study is obtained from various sources such as Bankscope, IMF World Economic Outlook, World Bank and Chicago Board of Options Exchange Market Volatility Index. The estimations were done by dynamic panel data regression modeling using system generalized methods of moments. Findings The findings reveal that both, the non-oil real GDP growth rate and inflation have favorable effects on NPLs. On the other hand, domestic credit to the private sector and the volatility index have an adverse effect on NPLs. Furthermore, the period-wise analysis shows that the relevance and significance of the determinants of NPLs vary between the precrisis and postcrisis periods. It is also reflected through the intercept dummy, which is found to be significant, indicating that the financial crisis, as a global economic factor, had a significant impact on NPLs. A number of robustness tests are applied, which indicate that the results are mostly robust and consistent in terms of the significance of the explanatory variables and the direction of their relationship with the dependent variable. Practical implications Policymakers and bank authorities must strive to maintain a healthy economy and implement macroprudential policies to improve the financial stability of banks and reduce credit risk. Originality/value To the best of the authors’ knowledge, this is likely the first study that empirically investigates the influence of the financial crisis on NPLs in the context of GCC economies. In addition, the research spans 19 years to produce more conclusive results.

From Catastrophe to Recovery: The Impact of Natural Disasters on Economic Growth in Developed and Developing Countries

The study investigates the impact of severe natural disasters on agriculture growth and GDP growth in both developed and developing countries using panel data from 1970 to 2019 with data from the EM-DAT database and the IMF World Economic Outlook database. The results of this study indicate that natural disasters have a detrimental impact on GDP growth and agricultural growth in both developed and developing countries. However, the impact is found to be greater in developing countries, despite having lower total damage costs as a percentage of GDP. The findings suggest that developing countries are more vulnerable to the economic impact of severe natural disasters compared to developed countries and can benefit from disaster risk financing tools. The current research highlights the urgency for governments to prioritize disaster preparedness and risk reduction measures, particularly in developing countries. Findings suggest that a higher proportion of educated individuals in a country can mitigate the impact of natural disasters. Additionally, the impact of population density on the cost of post-disaster reconstruction must also be considered by policymakers when allocating resources for disaster preparedness and recovery.

ІНВЕСТИЦІЙНІ МОЖЛИВОСТІ НА РИНКАХ, ЩО РОЗВИВАЮТЬСЯ: РИЗИКИ ТА ПЕРСПЕКТИВИ

The article analyzes the markets of developing countries characterized by a high level of instability, risks and uncertainty. The investment opportunities of emerging markets are identified, and the prospects for investment policy in this geopolitical framework and the risks of such activities are described. The IMF World Economic Outlook 2021 report and the main countries characterized by emerging markets as of 2023 are analyzed. It is noted that among these countries, China, India, Indonesia, Brazil, Nigeria and Pakistan are important for investors. For these countries, potential sectors that may be of interest for investment, such as technology, infrastructure, energy, agriculture, medical and pharmaceutical industries, have been identified. It is determined that an important aspect in decision-making is to take into account the factors of volatility in emerging markets. It is noted that the risks to investors may include political instability, financial system collapse, unfavorable changes in regulatory policy, and negative social consequences. On the other hand, the prospects for investors in emerging markets are rapid economic development and growing consumer power. The Catch-Up Effect, i.e. the catch-up effect according to the convergence theory, was studied: what this approach is based on and what the results of the study showed. The author analyzed the World Population Review's forecasts for India, which is the country with the highest projected GDP growth among emerging markets. It was noted that one of the key factors affecting the growth of the Indian economy is the continuation of reforms aimed at improving the business climate, promoting entrepreneurship and making India attractive to foreign investors. It was also noted that India has significant potential for the development of such industries as information technology, engineering, automotive, pharmaceuticals and agriculture. Thus, based on the World Population Review's forecasts, it can be concluded that India remains an important market for investors with high potential for economic growth and business development. However, it is also necessary to take into account the risks and uncertainties associated with emerging markets when planning an investment strategy. Thus, the article provides important information for investors interested in investing in emerging markets. It emphasizes the need to carefully evaluate risks and opportunities before making an investment decision, and emphasizes the importance of taking into account the specifics of the country's economy and political environment.

The impact of COVID-19 and associated policy responses on global food security.

We analyze the impact of the COVID-19 pandemic and associated policy responses on the global economy and food security in 80 low- and middle-income countries. We use a global economy-wide model with detailed disaggregation of agricultural and food sectors and develop a business-as-usual baseline for 2020 and 2021 called "But-for-COVID" (BfC). We then shock the model with aggregate income shocks derived from the IMF World Economic Outlook for 2020 and 2021. We impose total-factor productivity losses in key sectors as well as consumption decreases induced by social distancing. The resulting shocks in prices and incomes from the CGE model simulations are fed into the USDA-ERS International Food Security Assessment (IFSA) model to derive the impact of the pandemic on food security in these 80 countries. The main effect of the pandemic was to exacerbate the existing declining trend in food security. Food insecurity increases considerably in countries in Asia through income shocks rather than prices effects. We also review trade policies that were put in place to restrict imports and exports of food, and we evaluate their potential for further disruption of markets focusing on the food-security implications.

Impact of COVID-19 on ports, multimodal logistics and transport sector in India: Responses and policy imperatives

The COVID-19 pandemic spread rapidly in 2020 and led to full or partial lockdowns worldwide. The restrictions led to most economies contracting in the April–June quarter of 2020. As per the IMF World Economic Outlook of June 2020, the global economy was expected to contract by 4.9% in 2020, whereas the Indian economy was expected to contract by 4.5%, affecting a population of more than 1.3 billion. This led to disruption in the global supply chain network, adversely hitting all modes of transport, including ports and multimodal logistics.Based on the survey results of 98 respondents in the Indian ports, multimodal logistics and transport (“PMT”) sector conducted during the lockdown in May–June 2020, an adverse impact on profitability, employment, operations and capital expenditure was identified, which is consistent with observations from previous economic crises. Additionally, we have estimated the financial impact on different categories of organisations in the industry. Based on these impacts, this study identified key factors required to support the sector and build resilience for the future through technology interventions, developing multimodal transport systems, and providing financial support and employment support for small and medium enterprises (SMEs). By providing an analysis of the impact of COVID-19 on the different categories of organisations based on data collected during and shortly after the lockdown, the study makes a novel contribution to understanding the impact of such crises on the PMT industry at a granular level and the aggregate-level impacts with guidance for policy and managers and in particular, in an emerging economy context.

Mitigating Climate Change: Growth-Friendly Policies to Achieve Net Zero Emissions by 2050

Background paper prepared for the October 2020 IMF World Economic Outlook. This paper provides a detailed presentation of the simulation results from the October 2020 IMF World Economic Outlook chapter 3 and an additional scenario with carbon pricing only for comparison with the comprehensive policy package where green investments were also included. This paper has greatly benefitted from continuous discussions with Oya Celasun and Benjamin Carton on the design of simulations; contributions from Philip Barrett for part of the simulations; and research support from Jaden Kim. We also received helpful comments from other IMF staff. All remaining errors are ours. McKibbin and Liu acknowledge financial support from the Australian Research Council Centre of Excellence in Population Ageing Research (CE170100005).

Coping with a dual shock: The economic effects of COVID-19 and oil price crises on African economies

Oil-dependent countries face a twin-shock: in addition to the COVID-19 outbreak, they are facing an oil price collapse. In this paper, we study the impact of this dual shock on the forecasted GDP growth in Africa using the COVID-19 outbreak as a natural experiment. We use the IMF World Economic Outlook’s GDP growth forecasts before and after the outbreak. We find that COVID-19 related deaths result in -2.75 percentage points forecasted GDP growth loss in the all sample while oil-dependence induces -7.6 percentage points loss. We document that the joint shock entails higher forecasted growth loss in oil-dependent economies (-10.75 percentage points). Based on oil price forecasts and our empirical findings, we identify five recovery policies with high potential: social safety net policy, economic diversification, innovation and technological transformation, fiscal discipline, and climate-friendly recovery policy.

Assessing the impact of COVID-19 on global fossil fuel consumption and CO2 emissions

We assess the effect of the COVID-19 pandemic on global fossil fuel consumption and CO2 emissions over the two-year horizon 2020Q1-2021Q4. We apply a global vector autoregressive (GVAR) model, which captures complex spatial-temporal interdependencies across countries associated with the international propagation of economic impact due to the virus spread. The model makes use of a unique quarterly data set of coal, natural gas, and oil consumption, output, exchange rates and equity prices, including global fossil fuel prices for 32 major CO2 emitting countries spanning the period 1984Q1–2019Q4. We produce forecasts of coal, natural gas and oil consumption, conditional on GDP growth scenarios based on alternative IMF World Economic Outlook forecasts that were made before and after the outbreak. We also simulate the effect of a relative price change in fossil fuels, due to global scale carbon pricing, on consumption and output. Our results predict fossil fuel consumption and CO2 emissions to return to their pre-crisis levels, and even exceed them, within the two-year horizon despite the large reductions in the first quarter following the outbreak. Our forecasts anticipate more robust growth for emerging than for advanced economies. The model predicts recovery to the pre-crisis levels even if another wave of pandemic occurs within a year. Our counterfactual carbon pricing scenario indicates that an increase in coal prices is expected to have a smaller impact on GDP than on fossil fuel consumption. Thus, the COVID-19 pandemic would not provide countries with a strong reason to delay climate change mitigation efforts.

The macroeconomic costs of conflict

Macroeconomic costs of conflict are generally very large, with GDP per capita about 28 percent lower ten years after conflict onset. This is overwhelmingly driven by private consumption, which falls by almost 25 percent ten years after conflict onset. Conflict is also associated with dramatic declines in official trade, with exports (imports) estimated to be 58 (34) percent lower ten years after conflict onset. The onset of conflict often also induces significant refugee outflows to neighboring non-advanced countries in the short run, and relatively small but very persistent refugee outflows to advanced countries over the long run. To alleviate reverse causality concerns between GDP and conflict onset, we control for pre-conflict GDP forecasts from the IMF World Economic Outlook and show that similar results are obtained with and without pre-conflict GDP forecasts.

Entrepreneurship and Economic Growth: Evidence from G-20 Economies

The present study has investigated different facets of entrepreneurship and evaluated the relationship between the dynamics of entrepreneurship and economic growth in G-20 economies while controlling the impact of lower and higher income group economies. We have used an econometric model by pooling the cross-section of countries with time-series data on each country over the study period of 2001–2016 depending upon the availability of the dataset. Data have been taken from Global Entrepreneurship Monitor (GEM) for entrepreneurial dynamics, World Economic Forum, and IMF World Economic Outlook database. Total Entrepreneurship Activity (TEA) is used as a proxy for measuring entrepreneurial dynamics, GDP per capita (adjusted PPP) for measuring economic growth, and Growth Competitiveness index (GCI) for measuring competitiveness. We have found a significant positive relationship between entrepreneurial activities with respect to GDP, GCI, respectively. The control variable also has significant impact on entrepreneurial activities. The result of regression models has supported that competitiveness and economic growth have a significant impact on entrepreneurial dynamics in G-20 countries. Study results have suggested that there must be more advanced strategies to accelerate the growth rate and move more rapidly toward the Schumpeterian framework. Policymakers should emphasize more on promoting innovative entrepreneurial activities to achieve more economic growth and development.

A method to analyze the sectoral impact of Fiscal support for COVID-19 affected economies: The case of Oceania

In this paper, we apply the method of computable general equilibrium (CGE) modeling in economics to ascertain how fiscal support measures such as wage subsidies, small business loans, and finance guarantee schemes have impacted at an economy-wide and sectoral level for 8 COVID-19 affected economies in Oceania. We model our scenarios based on IMF World economic outlook projections, combined with the fiscal stimulus packages offered to counter this global health pandemic's recessionary effect. Our study confirms that the adverse impact of COVID-19 on output is cushioned through a large fiscal stimulus package wherever offered. This package would still be inadequate to avoid unemployment and job losses in tourism and education services in Oceania, with continued support essential for their survival in 2021.•The approach entails steps (1) to (3), as outlined in the paper.•Future researchers will find this method useful in evaluating the adverse impact of not only COVID-19 but any other external shocks to the economy, either directly or indirectly, that involves fiscal support mechanisms.

Assessing the Impact of COVID-19 on Global Fossil Fuel Consumption and Co2 Emissions

We assess the effect of the COVID-19 pandemic on global fossil fuel consumption and CO2 emissions over the two-year horizon 2020Q1-2021Q4. We apply a global vector autoregressive (GVAR) model, which captures complex spatial-temporal interdependencies across countries associated with the international propagation of economic impact due to the virus spread. The model makes use of a unique quarterly data set of coal, natural gas, and oil consumption, output, exchange rates and equity prices, including global fossil fuel prices for 32 major CO2 emitting countries in 1984-2019. We produce forecasts of coal, natural gas and oil consumption, conditional on GDP growth scenarios based on alternative IMF World Economic Outlook forecasts that were made before and after the outbreak. We also simulate the effect of a relative price change in fossil fuels, due to global scale carbon pricing, on consumption and output. Our results predict fossil fuel consumption and CO2 emissions to return to their pre-crisis levels, and even exceed them, within the two-year horizon despite the large reductions in the first quarter following the outbreak. Our forecasts anticipate more robust growth for emerging than for advanced economies. The model predicts recovery to the pre-crisis levels even if another wave of pandemic occurs within a year. Our counterfactual carbon pricing scenario indicates that an increase in coal prices is expected to have a smaller impact on GDP than on fossil fuel consumption. Thus, the COVID-19 pandemic would not provide countries with a strong reason to delay climate change mitigation efforts.

A Multilevel Model of Situational and Individual Determinants of Ethical Preferences: Multilevel and Bayesian Estimation of Attitudes to Unethical Behaviour

This paper presents a multilevel model that examines the determinants of individual differences in ethical attitudes (as indicated in opinions of bribery) which underpin tax compliance (Alm & Torgler, 2011). The drivers of individual ethical attitudes are fundamental when examining individual taxation, but also the actions of corporate decision makers. In this way it bridges the gap between tax morale and business ethics, using elements from the ethics and criminology literature to develop a fuller model of the individual decision maker in their situation. Its use of a multilevel model provides more accurate estimates of the individual-level causal factors that lead to ethical attitudes. It uses a binomial generalized linear model and logistic regression, controlling for the multilevel nature of the data, to estimate the impact of individual characteristics on ethical attitudes. The analysis uses a range of categorical factors from the World Values Survey and augmented with national level characteristics from the IMF World Economic Outlook database. The model is re-estimated using MCMC estimation in order to control for potential biases in maximum likelihood estimation of binomial models and dependent variables with small mean values (Spiegelhalter, 2002). Factors are reviewed in terms of the estimated certainty intervals, Bayesian p-values and Estimated Sample Sizes of the MCMC model, and model evaluation uses the Deviance Information Criterion. These confirm that individual factors do have significant explanatory power, even controlling for group-effects in the multi-level model framework. The analysis produces a detailed breakdown of the impacts of explanatory factors, having controlled for variation between clusters, detailing the relevance of sub-groups in terms of age, gender, and education as well as additional factors such as religious observance, employment and income. This produces a more reliable set of estimates that produce results at odds with a number of the standard results accepted to date. It also highlights the relative weight of individual level variation in the ethical attitudes, regardless of cultural or geographic clustering. Key Points: • Examines the relationships between causal factors and ethical attitudes in the WVS/EVS Integrated dataset (N=178 country/year clusters, n=187,869) • Model incorporating causal role of several ‘demographic’ variables • Examines the role of situation in multilevel causal structure determining attitudes • Produces appropriate estimates of ethical preferences, removing misspecification bias by separating common ‘national’ influences from those varying at the individual level.

South Asian Economic Growth Overview: The Nepal Case

This paper presents the economic figure of South Asian countries: Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. The paper incorporates the summary report of South Asian economic stance based on the report of Asian Development Outlook 2017 and IMF's world economic outlook database 2017 in relation to gross domestic product based on purchasing power parity (PPP), GDP per capita, Investment in Gross Capital Formation, Gross National Saving and Inflation based on average consumer price of South Asian countries and also special focus to Nepal. The study period covers from 2002 to 2017. The paper highlighted that there exists massive fluctuation in the GDP growth rate of South Asian Countries. More specifically, Maldives found highly fluctuated GDP growth rate followed by Afghanistan during 2003 to 2016 year study period. Bhutan, among the South Asian countries have made highest portion of investment whereas Pakistan seemed the lowest position for investment in the percentage of GDP. From 2002 to 2010, Afghanistan faced the toughest inflation among the South Asian countries and improved the inflation to the satisfactory level during 2011 to 2016. Nepal experienced the highest inflation during 2011 to 2016 and failed to improve in comparison to the period from 2002 to 2010. The need of improving per capita GDP, increasing the portion of investment for capital formation and controlling inflation in the region, is prime concern for rapid economic growth in South Asia.

Do IMF fiscal forecasts add value?

AbstractWe used a panel of 29 advanced and emerging market countries to investigate whether the IMF's World Economic Outlook (WEO) fiscal forecasts add value in terms of forecast accuracy and information content, relative to private sector forecasts (from Consensus Economics). We find that: (i) WEO forecasts are not significantly less accurate than Consensus forecasts; (ii) WEO and Consensus forecasts tend to mutually encompass one another; and (iii) each source of forecasts appears to contain some information that is not embedded in the other source.

Theoretical Basis for Composition of Economic Strategy for Industry Development

1. Introduction Machine-manufacturing industry, just like other sectors of the Russian economy, is in a situation of permanent influence of long-term systemic challenges that determine not only the global trends, but also internal destabilizing factors. Both financial and political crises have had a negative impact on the economy as a whole, but the industry is a kind of framework of the national economy, which is based on the defense and aerospace industry, and a number of other strategically important industries and areas of production. Also high level of development of machine-manufacturing and engineering industry helps to solve the problems of economic and social character, due to spillover effect. The role of the engineering industry for the country is further enhanced by the solution of such complex tasks, as import substitution, the reform of the military-industrial complex and modernization of manufacturing industries. Thus, the aim of our research is to develop adequate current realities of the economic development strategy of the machine-manufacturing industry, taking into account all the problems as well as offering a balanced solution to them. 2. Base part of research The above challenges necessitate the development of the economic development strategy for the industry, including its long-term investment plan. Challenges can be roughly grouped into the following categories: 1. Strengthening of competition on the global machine-manufacturing market. Prior to the 1990s, the leaders of machine-building were countries such as the USA, the USSR, Germany and Japan (Budik and Schlossberger, 2015). However by the 2000s the picture has changed dramatically, the place of undisputed leader in the production of machine tools was transferred to China, followed by Japan, Germany, Italy, South Korea and Taiwan. Japan, Germany and Italy dominate the production of the most complex and sophisticated machinery. According to Eurostat, the United States went down to 7th place in the world, and Russia is now 21st (Kondratiev). Nowadays, the mechanical engineering and metal processing account for about 20% of the total volume of industrial production in Russia, and the annual turnover of the industry is more than 55 billion US dollars. For comparison, in the US, Japan and Germany the share of engineering products as the total industrial production is around 36-45% (Zavalko). According to forecasts composed by IMF World Economic Outlook for 2025 the top producers will the countries that are now developing, with China, EU, USA and Japan still retaining the leading positions. The total volume of machine-building production will increase by 2025 to reach $ 930 billion, corresponding to an annual growth of 3.8% (Kondratiev). 2. New wave of technological changes in the industry, reinforcing the role and importance of innovations (Dasanayaka and Sardana, 2015; Giannarakis, 2016). A new technological foundation is being formed, based, on utilizing IT and nanotechnology. Each year the US invests, on average 2-2.5% of GDP on scientific research in the sphere of manufacturing and engineering, and in the EU countries this proportion is 3% of GDP. In the US, the share of state financing of engineering projects can reach up to 50%. Given this, the process of adapting the achievements in the military and aerospace industry is then carried out. Germany has also carried out a series of reforms to renew the manufacturing sector, financing the operation through effective fiscal policy. Currently, every third manufacturing plant in Germany is considered innovative, with two-thirds of total engineering production being exported (Zavalko). 3. Increase in importance of role of human capital as the main factor of economic development, the deficit of qualified engineering workers, aging and deterioration of the qualitative composition of staff. 7-10 years ago, this given problem was attempted to be solve by trying to attract foreign staff, however foreign top-managers were not able to solve all the internal problems of the industry, due to not being familiar enough with Russian specifics (Sayfieva, Ermilina). …

The Indirect Cost of Disability Adjusted Life Years Lost among the Elderly in Kenya

Background: As Kenya accelerates the momentum to attain the Sustainable Development Goals (SDG) 3 on health and 13 on combatting impacts of climate change, it is critically important not to overlook their impacts on the elderly, i.e. people aged 60 years and above (elderly). The objective of this study was to estimate the indirect cost (productivity losses) of disability-adjusted life years (DALYs) lost among the elderly in Kenya in 2015.Methods: The indirect cost associated with jth disease (or health condition) DALYs lost among the elderly is the product of the per capita non-health GDP in purchasing power parity (PPP) and the total jth disease (or health condition) DALYs lost in a specific age group. Per capita non-health GDP equals Kenya’s per capita GDP minus total health expenditure in 2015. The study covers all the diseases and health conditions reported in WHO Global Health Observatory (GHO). The data on DALYs and per capita total health expenditure were obtained from WHO GHO; while per capita GDP data was from IMF World Economic Outlook database.Results: About 2,238,004 DALYs were lost among the elderly in 2015. That health loss resulted into a total indirect cost of Int$ 7,088,274,986; which was evenly distributed among males and females. Approximately, 64.1% of the indirect cost resulted from non-communicable diseases, 29.3% from communicable and nutritional conditions, and 12.2% from injuries. If Kenya is able to fully achieve SDG targets 3.1 on maternal mortality, 3.3 on communicable diseases, 3.4 on NCDs and 3.6 on road traffic accidents by 2030, that would lead to a reduction of 625,238.21 DALYs (38.4%) lost among the elderly, which is equivalent to a saving of Int$ 1,986,641,742 (44.9%) in indirect costs (productivity losses).Conclusions: Kenya incurs every year substantive productivity losses due to morbidity and premature mortality among the elderly. Therefore, there is need for increased government, private sector and partner investments into health and wellbeing of the elderly to prolong their intrinsic and functional capacities.Key words: Elderly, indirect cost, productivity loss, disability-adjusted life year (DALY)