IMF Working Papers

Spillovers from Large Emerging Economies: How Dominant Is China?

By Hany Abdel-Latif, Adina Popescu

January 24, 2025

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Format: Chicago

Hany Abdel-Latif, and Adina Popescu. "Spillovers from Large Emerging Economies: How Dominant Is China?", IMF Working Papers 2025, 027 (2025), accessed March 10, 2025, https://doi.org/10.5089/9798229000529.001

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper investigates the global economic spillovers emanating from G20 emerging markets (G20-EMs), with a particular emphasis on the comparative influence of China. Employing a Bayesian Global Vector Autoregression (GVAR) model, we assess the impacts of both demand-side and supply-side shocks across 63 countries, capturing the nuanced dynamics of global economic interactions. Our findings reveal that China's contribution to global economic spillovers significantly overshadows that of other G20-EMs. Specifically, China's domestic shocks have significantly larger and more pervasive spillover effects on global GDP, inflation and commodity prices compared to shocks from other G20-EMs. In contrast, spillovers from other G20-EMs are more regionally contained with modest global impacts. The study underscores China's outsized role in shaping global economic dynamics and the limited capacity of other G20-EMs to mitigate any potential negative implications from China's economic slowdown in the near term.

Subject: Economic theory, Emerging and frontier financial markets, Financial markets, Financial sector policy and analysis, Global value chains, Globalization, Oil prices, Prices, Spillovers, Supply shocks

Keywords: China's contribution, Domestic shock, Emerging and frontier financial markets, Emerging Economies, Global, Global transmission, Global value chains, Growth Spillover, GVAR model, IMF working paper No. 25/27, Oil prices, Outsized role, Spillovers, Supply shocks

Publication Details

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