The International Monetary Fund (IMF) recently highlighted the growing influence of domestic disturbances in G20 emerging economies on global economic dynamics.
In a report unveiled on Tuesday, it pointed out the significant role countries like China and Argentina play within the international economic framework.
According to the IMF, these nations have transitioned from being mere recipients of global shocks to active contributors to economic fluctuations worldwide.
This shift is primarily attributed to their deep integration into global trade and commodity networks.
In its World Economic Outlook report, prepared for the upcoming IMF World Bank Group Spring Meetings in Washington, DC, the IMF emphasized the escalating impact of domestic shocks from G20 emerging markets, especially China.
These disturbances now mirror the magnitude of those originating from more developed economies.
Notably, domestic issues in China can account for up to 10% of the variance in economic output in other emerging markets over three years, and 5% in advanced economies.
Similarly, shocks from other G20 emerging markets could lead to a 4% variation in both emerging and developed nations.
The report underlines the interconnectedness of global economies, highlighting both the potential risks and benefits of economic fluctuations in distant countries.
Since 2000, the G20’s ten emerging economies, including powerhouses like China, India, and Brazil, have seen their collective share of global GDP more than double.
The incidence of economic spillovers has surged, particularly from China, with moderate increases also observed from Brazil, India, and Mexico.
China’s struggle with persistent economic challenges, such as soaring local government debt and a declining property market, alongside the shifting focus of Russia’s economy towards Asia, illustrates the complex web of factors affecting global economic health.
The IMF warns of a slowdown in the previously robust growth rate of G20 emerging markets, projecting a medium-term growth outlook of 3.7%.
This deceleration poses risks not only to the economies directly involved but also to global growth and development.
The organization urges policymakers to build adequate reserves and fortify policy frameworks to effectively navigate potential economic shocks, highlighting the precarious nature of the current global economic landscape.