Growth in the Asian economies has also moderated as these countries face their own constraints, chief among them rising inflation and interest rates, which have eroded the already fragile consumer and business confidence there. Meanwhile, commodity-producing countries such as Canada and Australia, which had regained strong momentum after the recession, are caught in an unusual convergence of crosswinds: Demand for commodities is supporting growth, while the rising risk of a global slowdown and high inflation in emerging economies are tripping it up.
"A year ago, hopes were high that the recovery was becoming self-sustaining. But as the year progressed, some troubling new trends began to emerge," said Beth Ann Bovino, Standard & Poor's senior economist. A streak of weak economic data--including sluggish growth in the U.S. housing market, weak employment in the developed economies, and rising inflation in emerging markets--and the natural catastrophes that struck Japan and Australia sent shockwaves among investors. And later, disappointing housing and manufacturing results in most of the developed and developing economies hit consumer and business sentiment hard. "But the real beast turned out to be the sovereign debt crisis in Europe. The very stimulus measures these governments adopted to get out of the recession now threatened to engulf even the stronger economies, and what began in the euro-zone periphery in Greece spread to the other side of the Atlantic," she said.
The recent turmoil in the financial markets reflects a harsh reality: The global recovery is stumbling, and policymakers' hands are tied. For now, our global outlook is more gloom than doom. "While the economic recovery will continue to be slow and painful, and prospects for growth are worsening, we believe the chance of falling into another recession remains slim," said Ms. Bovino.
The story leads a new special report titled "Global Economic Outlook: The Recovery Can't Get A Grip." Other articles in the report include region- and country-specific outlooks, as well as a look at the emerging U.S.-'AAA' G-5 credit gap.
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. Members of the media may request a copy of this report by contacting the media representative provided.
Media Contact:
Mimi Barker, New York (1) 212.438.5054, [email protected]
John Piecuch, New York (1) 212-438-1579, [email protected]
Analyst Contacts:
Beth Ann Bovino, New York (1) 212-438-1652