International Monetary Fund: The Impact of China's Economic Recession is Beyond Initial Expectations

The International Monetary Fund (IMF) states that the recession in China's economy is having an impact beyond initial expectations on the global economy and warns that world economies must continue to support reforms and investments. The IMF's report to the G20, composed of 20 major economies, was presented on September 2, ahead of their economic ministers' meeting in Ankara. According to this international organization, the turmoil in China's economic situation and other factors such as capital outflows increase the risks to global economic growth. The IMF has warned that advanced and emerging economies must continue to support reforms and investments to demonstrate that the chaotic market situation and China's recession will not halt economic activities. The new report from the IMF will be the topic of discussion on the upcoming Friday and Saturday in Ankara. However, the IMF has not changed its previous forecast of a 3.3% global economic growth for this year. According to this report, the relative growth of economic powers will continue in the second half of 2015 and into 2016, due to the impact of low oil prices. Meanwhile, the rising value of the dollar or the decline in stock values in global markets are other issues that the IMF warns about in the near future. On September 2, following the start of the workweek in global markets, the value of stock indices in China experienced a severe drop, which continued the next day. This situation, along with concerns that China's economic recession is worse than previously thought, has caused turmoil in global markets. In response, the People's Bank of China decided to cut interest rates, and the U.S. Federal Reserve also decided not to raise interest rates this month. These decisions had a relative effect on improving stock markets. Nevertheless, investors and experts continue to follow the situation with concern and skepticism. The G20 countries, whose economic ministers and central bank heads are gathering in response to China's economic recession, consist of the largest economies in the world, including members of the G7 as well as China, Russia, India, Indonesia, Turkey, Saudi Arabia, and Brazil, which together hold over 80% of the world's total economy.