New WFE Research quantifies the impact of stock exchanges on economic growth

January 6, 2025--The World Federation of Exchanges, the global industry association for exchanges and CCPs (The WFE), has published new research which analyses the link between stock market development and economic growth on a global scale.
The research analysed quarterly data from 36 countries over two decades (2003-2022).

Key findings

Short term analysis:

There is a two-way influence between economic output growth and the stock market capitalisation in the short term, but only for high-income countries.

Low and middle-income countries experience a unidirectional relationship in the short term, where stock market capitalisation positively impacts economic growth, but not vice versa.

This means that low and middle-income country exchanges aren’t seeing a positive impact on their market capitalisation as a result of economic growth, though higher market capitalisation leads to higher economic growth.

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Source: WFE (World Federation of Exchanges)