Bangkok--6 Jul--Standard & Poor's
Disappointing economic data suggest that the global recovery has entered a "soft patch," said Standard & Poor's in a report titled "How Serious Are The Risks Of A Double Dip In Developed Markets?," published today.
"Temporary factors, such as the supply chain disruption following the March 11 earthquake in Japan, are in part responsible for the lackluster world economic growth in the second quarter of this year," said Jean-Michel Six, Standard & Poor's chief economist for Europe. "And other, longer-lasting trends have also surfaced, such as flagging consumer demand in developed markets and a slowdown in emerging markets following tighter monetary policies."
Still, Standard & Poor's doesn't expect a double dip in developed markets. We believe emerging markets will continue to be a major driver of global growth. Our now more balanced outlook for emerging markets carries a couple of important implications, however, for private sector companies in developed economies. First, higher inflation in emerging markets means that input costs are rising as well. In the past decade, emerging markets exported "disinflation" to developed markets as their export prices kept contracting. This is no longer the case. Second, tighter monetary policies are reining in growth in emerging markets. This means that the booming demand for foreign products is gradually easing.
Under our baseline forecast, which already factored in sluggish consumer spending, we continue to expect positive world GDP growth, albeit subpar by historical standards, for the rest of this year and in 2012. Critical to this anticipation is continued growth in emerging markets, which has been fueling the global recovery since 2009.
The report is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to
[email protected]. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Alternatively, call one of the following Standard & Poor's numbers: Client Support Europe (44) 20-7176-7176; London Press Office (44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; Stockholm (46) 8-440-5914; or Moscow (7) 495-783-4009.
Media Contact:
Mimi Barker, New York (1) 212-438-5054,
[email protected]
Analyst Contacts:
Jean-Michel Six, Paris (33)-1-44-20-67-05