China’s economic slowdown is having a broader impact on the global economy than originally expected, especially on emerging markets, the International Monetary Fund said late on Wednesday.
In a report for Group of 20 (G20) finance chiefs meeting this week in Ankara, the IMF said the turmoil in China and other factors like capital flow reversals were increasing the risks to economic growth around the world.
It warned that advanced and emerging economies need to continue to support demand with reforms and investment to ensure that the turbulence in markets and China’s troubles do not stall economic activity in the rest of the world.
“China’s transition to a lower growth, while broadly in line with forecasts, appears to have larger-than-previously-envisaged cross-border repercussions, reflected in weakening commodity prices and stock prices,” the Fund said.
Especially, “near-term downside risks for emerging economies have increased” from China-related fallout, sinking commodity prices, the strong US dollar, and sharp reversals in financial markets, it said.