Paris - AFP
The global economy has hit a \"soft patch\" due to the disruption caused by Japan\'s March earthquake but emerging market growth should prevent a double-dip recession, Standard and Poor\'s said on Tuesday. In a report on the risks of the economy falling back into recession, S&P said the damage to international supply chain systems from the devastating earthquake in Japan appears to have caused a distinct second quarter slowdown. \"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,\" Jean-Michel Six, S&P\'s chief economist for Europe, said in a statement. \"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,\" Six added. However, this should not necessarily result in another recession in the developed world because \"emerging markets will continue to be a major driver of global growth,\" S&P said. It noted at the same time that a \"more balanced outlook for emerging markets\" suggests that higher inflation in these countries will see them charging higher prices for their exports. In the past decade, emerging markets exported \"disinflation\" to developed markets as their export prices kept contracting but \"this is no longer the case,\" it said. Inflation has been picking up steadily in recent years as raw material costs have risen steadily, with many developed countries now needing to hike interest rates to control prices. S&P, one of the top three credit rating agencies, said growth rates in 2010 of 10.3 percent in China, 8.5 percent in India and 7.5 percent in Brazil were unsustainable and \"associated with overheating.\" As a result, emerging country economies were also having to adopt tighter monetary policies as in China and India which crimps their growth and \"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 growth, albeit sub-par 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,\" S&P said.