‘The ball is in the policymakers’ court to sustain recovery in global economy’
Global rating agency Standard & Poor’s (S&P) has said that it expects India to grow by 6.5 per cent during 2013, amidst the possibility of global economic recovery continuing during the year.
For China, S&P expects the growth rate to move back to the 8 per cent level in 2013, after it slipped to 7.4 per cent in the third quarter of 2012.
In a report on global credit outlook for 2013, S&P said that “the ball is in the policymakers’ court” to sustain the recovery in global economy.
Noting that there is “not much room for error in the global economy” in 2013, the S&P economists said it had been through a very challenging period in recent years.
This included “the near total collapse of the financial system in 2008 and the very deep global recession that followed at the end of 2008 and the first-half of 2009.”
“The global economy started recovering in mid-2009, and that recovery at a global level has pretty much continued. We expect it to continue into 2013, but it is a fairly precarious situation.
“Precarious because the recovery process, the healing, deleveraging, balance sheet recovery, and economic recovery, is still working its way through the system,” Standard & Poor’s Chief Global Economist Paul Sheard said.
Mr. Sheard said that S&P expected a “soft landing” in China, while its forecast for India was a 6.5 per cent growth in 2013.
“We have one major economy continuing to recover in our base case scenario. We see China going through a so-called soft landing. What it means is that China was growing at a very rapid pace, sometimes too rapid, after the financial crisis.
“Average year-on-year growth since the third quarter of 2008 has been 8.9 per cent though it’s ticked down a bit this year. Chinese policymakers needed to rein in an overheating economy,” Mr. Sheard said.
During the process, growth had decelerated from 12 per cent at one point to 7.4 per cent in the third quarter of this year, he said adding that deceleration of the Chinese economy was probably bottoming out and growth would probably move back closer toward 8 per cent entering 2013.
S&P said that it expected rating stability and even some positive trends in the emerging world, while the global growth would also be positive next year at little under 3 per cent.
The rating agency said that many emerging Asian economies were using their growth productively to strengthen their infrastructure, and thereby increase long-term growth potential, while still maintaining manageable debt burdens.
“So we could see some upgrades in parts of the emerging world,” it said, without naming the countries.