Shocks in G20 Emerging Economies Hit Rich-World Growth, IMF Says

A view of an advertising billboard for the upcoming annual meetings of the International Monetary Fund and the World Bank, in Marrakech, following last month's deadly earthquake, Morocco October 1, 2023. REUTERS
A view of an advertising billboard for the upcoming annual meetings of the International Monetary Fund and the World Bank, in Marrakech, following last month's deadly earthquake, Morocco October 1, 2023. REUTERS
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Shocks in G20 Emerging Economies Hit Rich-World Growth, IMF Says

A view of an advertising billboard for the upcoming annual meetings of the International Monetary Fund and the World Bank, in Marrakech, following last month's deadly earthquake, Morocco October 1, 2023. REUTERS
A view of an advertising billboard for the upcoming annual meetings of the International Monetary Fund and the World Bank, in Marrakech, following last month's deadly earthquake, Morocco October 1, 2023. REUTERS

Domestic shocks in emerging economies in the Group of Twenty (G20) are increasingly impacting growth in the rich world, said a report released by the International Monetary Fund ahead of its next week's Spring Meetings in Washington.
The Spring Meetings, to convene from April 17 to 19, DC, bring together central bankers, ministers of finance and development, parliamentarians, private sector executives, representatives from civil society organizations and academics to discuss issues of global concern, including the world economic outlook, poverty eradication, economic development, and aid effectiveness.
IMF Managing Director Kristalina Georgieva will kickstart the meetings, presenting the outlook for the global economy and policy priorities.
Saudi Arabia's minister of finance, Mohammed Al-Jadaan, will chair the International Monetary and Financial Committee meeting. Al-Jadaan was chosen as Chair of the Committee for a term of three years, effective January 4, 2024.
The Committee deliberates on the principal policy issues facing the IMF. It normally meets twice a year—in the spring and during the IMF/World Bank Annual Meetings in the fall.
“Since 2000, spillovers from domestic shocks in G20 emerging markets — particularly China — have increased and are now comparable in size to those from shocks in advanced economies,” the IMF wrote in a chapter of its World Economic Outlook report.
Those countries -- ranging from China, the world's second-largest economy, to default-prone Argentina -- have become so embedded in the global economy, particularly via trade and commodity value chains, that they are “no longer simply on the receiving end of global shocks,” it added.
The IMF also showed that since China’s accession to the World Trade Organization in December 2001, emerging markets of the G20 now account for about 30 percent of global economic activity and about one quarter of global trade.
At the same time, these economies have become increasingly systemic through their integration into global value chains (GVCs), with the potential to move global markets, it showed.
“This implies that spillovers to growth from shocks originating in these economies—as well as from their structural slowdown over the past decade—can have far greater ramifications for global activity,” the report added.
It said the intertwined nature of economies underscores the risks to the rich world of shocks in faraway nations but also the boost they could get if the economies strengthen again.
The ten emerging economies in the G20 - Argentina, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa and Türkiye- have more than doubled their combined share of global GDP since 2000.
“Not only has this helped provide global momentum for growth and trade, it has also been a force for lower output volatility—thanks to cross-country diversification,” the IMF report said.
Earlier, the Fund’s data showed Saudi Arabia's GDP grew from $189.5 billion in 2000 to $1.1 trillion in 2023.
However, fading growth prospects for G20 EMs have driven more than half of the 1.9 percentage point slowdown in medium-term global growth since the global financial crisis, with China accounting for about 40 percent.
The medium-term growth outlook for G20 EMs has weakened by 0.8 percentage point to 3.7 percent as a result of scars from the pandemic and the price shocks that followed the Russian invasion of Ukraine.
Overall, spillovers have increased almost threefold since the early 2000s, led by China, while spillover risks from Brazil, India and Mexico have also grown moderately.
China is struggling to overcome prolonged economic headwinds, with high levels of local government debt limiting infrastructure investment and the property market entering its fourth year of free fall. Consumer and investor confidence are also under pressure.
The IMF said the Russian economy's pivot toward Asia will likely shift the direction of spillover effects.
Across the G20 emerging markets, the IMF warned that average growth of 6% per year over the past 20 years would slow and lowered the medium-term growth outlook to 3.7%.
Global Economic Growth
The IMF said global economic growth will reach just 2.8% by 2030, a full percentage point below the historical average, unless major reforms are made to boost productivity and leverage technologies such as artificial intelligence.
“Without ambitious steps to enhance productivity, global growth is set to fall far below its historical average,” the IMF said in a chapter of its forthcoming World Economic Outlook, warning that expectations of weak growth could discourage investment, possibly deepening the slowdown.
The global lender said the persistent low-growth scenario, combined with high interest rates, could also restrict governments' ability to counter economic slowdowns and invest in social welfare or environmental initiatives.
“All this is exacerbated by strong headwinds from geoeconomic fragmentation, and harmful unilateral trade and industrial policies,” it said in a blog accompanying Chapter 3 of the WEO, to be released in full next Tuesday.
A year ago, the IMF said it expected medium-term growth to hover around 3%. The new forecast reflects downward revisions for medium-term growth across all income groups and regions, most significantly in emerging market economies.
The IMF urged countries to take urgent action to counter the weakening growth outlook, warning that it worsened prospects for living standards and global poverty reduction.
“An entrenched low-growth environment, coupled with high interest rates, would threaten debt sustainability and could fuel social tension and hinder the green transition,” it said.



Air France-KLM to Take Majority Stake in Scandinavian Airline SAS

(COMBO) This combination of pictures created on July 04, 2025 shows a Scandinavian airline SAS plane flying over Heathrow airport on the outskirts of London on January 15, 2024 (top) and an Air France-KLM plane taking off from Tegel 'Otto Lilienthal' Airport in Berlin on November 8, 2020. (Photo by Adrian DENNIS and Odd ANDERSEN / AFP)
(COMBO) This combination of pictures created on July 04, 2025 shows a Scandinavian airline SAS plane flying over Heathrow airport on the outskirts of London on January 15, 2024 (top) and an Air France-KLM plane taking off from Tegel 'Otto Lilienthal' Airport in Berlin on November 8, 2020. (Photo by Adrian DENNIS and Odd ANDERSEN / AFP)
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Air France-KLM to Take Majority Stake in Scandinavian Airline SAS

(COMBO) This combination of pictures created on July 04, 2025 shows a Scandinavian airline SAS plane flying over Heathrow airport on the outskirts of London on January 15, 2024 (top) and an Air France-KLM plane taking off from Tegel 'Otto Lilienthal' Airport in Berlin on November 8, 2020. (Photo by Adrian DENNIS and Odd ANDERSEN / AFP)
(COMBO) This combination of pictures created on July 04, 2025 shows a Scandinavian airline SAS plane flying over Heathrow airport on the outskirts of London on January 15, 2024 (top) and an Air France-KLM plane taking off from Tegel 'Otto Lilienthal' Airport in Berlin on November 8, 2020. (Photo by Adrian DENNIS and Odd ANDERSEN / AFP)

Air France-KLM plans to increase its stake in Scandinavian airline SAS to 60.5%, the latest step towards consolidating Europe's fragmented airline sector as carriers seek to strengthen their position against rivals.

The Franco-Dutch airline group said on Friday it intended to increase its stake from 19.9% currently by acquiring the stakes held by top shareholders Castlelake and Lind Invest.

The purchase, subject to regulatory clearances, is expected to close in the second half of 2026, Reuters quoted Air France-KLM as saying.

The value of the investment would be determined at closing, based on SAS's latest financial performance, including core earnings (EBITDA) and net debt, the company said. It declined to give details on those metrics.

Air France-KLM expects to generate "three-digit million" euros in synergies from raising its SAS stake, Air France-KLM finance chief Steven Zaat told analysts on a call.

Zaat said the deal would be funded from cash or a "plain vanilla bond" and would not impact the drive to reduce the group's hybrid debt. "We have ample room for it," he said.

Air France-KLM shares were flat in early trading.

JPMorgan analysts said there were reasons to be positive about the deal.

"SAS offers deeper access to a GDP-rich region in Scandinavia, there will now be an opportunity to unlock cost synergies as SAS becomes a subsidiary of the group," they said in a note, adding that "industry consolidation should also be viewed positively for the whole sector, even if not game-changing in terms of size."

INDUSTRY CONSOLIDATION

SAS welcomed Air France-KLM's announcement.

"European consolidation had to happen further, and we're very happy to be part of that," SAS CEO Anko van der Werff told Danish broadcaster TV2.

"In the current setup where Air France-KLM is a 19.9% shareholder, they're still a competitor," he said. "With the new stake, going above 50%, we can really tap into all of those synergies and offer those benefits to customers."

SAS said it would continue to invest in its fleet and network.

In 2023, Air France-KLM said it would invest about $144.5 million for its initial SAS stake, boosting its presence in Sweden, Denmark and Norway with the option to become a controlling shareholder after a minimum of two years, subject to conditions.

SAS exited from Chapter 11 bankruptcy protection in August last year.

The two carriers have already had a commercial cooperation since summer 2024. Control of SAS would allow Air France-KLM to expand in the Scandinavian market and create additional value for shareholders, Air France-KLM said in a statement.

"Following their successful restructuring, SAS has delivered impressive performance, and we are confident that the airline's potential will continue to grow through deeper integration within the Air France-KLM Group," said Air France-KLM CEO Ben Smith.

The deal comes as executives seek more consolidation in Europe's fragmented airline industry, which they say is needed to compete with US and Middle Eastern rivals.

Earlier this year, Germany's Lufthansa bought a 41% stake in Italy's ITA Airways and a stake in Air Baltic. The Portuguese government is looking to privatize its national carrier TAP.

Lufthansa and Air France are also in talks about buying a stake in Spain's Air Europa.
SAS has 138 aircraft in service and carried more than 25 million passengers last year, generating revenues of 4.1 billion euros ($4.8 billion).

Air France-KLM group would have a majority of seats on the board of directors, while the Danish state will keep its 26.4% stake in SAS and its seats on the board.