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Written by Libby George
LONDON (Reuters) – Domestic shocks in emerging countries in the G20 are increasingly impacting growth in rich countries, the International Monetary Fund said in a report released on Tuesday.
These countries, from China, the world’s second-largest economy, to default-prone Argentina, are deeply integrated into the global economy, particularly through trade and commodity value chains, and are “no longer just receivers” of global shocks. among. ”
“Since 2000, the transmission of domestic shocks in G20 emerging economies, particularly China, has increased and is now comparable in magnitude to shocks in developed economies,” the IMF said in a report released ahead of next year. This was mentioned in a chapter of the economic outlook report. The IMF World Bank Group Spring Meetings will be held this week in Washington, DC.
Shocks within China can explain up to 10% of output variation in other emerging markets and 5% in developed countries after three years, while shocks from other G20 emerging markets It can explain up to 4% of a country’s variation. Developed countries said so.
The complex nature of the economy highlights not only the risks that shocks in far-flung countries pose to the rich world, but also the boost that could come if the economy strengthened again.
The 10 emerging economies of the G20 (Argentina, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa and Turkey) have more than doubled their combined share of global GDP since 2000.
Overall, spillovers have nearly tripled since the early 2000s, led by China, but spillover risks from Brazil, India, and Mexico have also increased modestly.
China has struggled to overcome lingering economic headwinds, with high levels of local government debt limiting infrastructure investment and the real estate market entering its fourth year of freedown. Consumer and investor confidence is also under pressure.
The IMF said the Russian economy’s pivot to Asia is likely to change the direction of spillovers.
The IMF has warned that the average annual growth rate of 6% over the past 20 years will slow across the G20 emerging economies, and has revised down its medium-term growth outlook to 3.7%.
He called on policymakers to maintain adequate buffers and strengthen policy frameworks to deal with potential shocks.
“The lackluster outlook for the G20 emerging economies risks spilling over to other emerging markets and the developing world, reversing growth and development,” the report said.
(Reporting by Libby George; Editing by Karin Strohecker and Christina Fincher)
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