Eurozone crisis main threat to global economy

The eurozone crisis tops a list of threats to the global economy followed by the risk of a “hard landing” in emerging economies, ratings agency Moody’s Investors Service said on Thursday. “The main risks to the global macro outlook stem from a deeper than currently expected recession in the euro area, for example caused by deeper credit contraction,” Moody’s said in its latest macro-risk report. The agency then underscored “the risk of a hard landing in major emerging market economies, including China, India and Brazil,” followed by “an oil-price supply-side shock resulting from resurfacing geopolitical risks.” Finally, “the risk of sudden and sharp fiscal tightening in the US in 2013, given recent political gridlock” rounded out the list of major threats to business activity worldwide, Moody’s said. It forecast overall economic growth of the G20 group of industrialised and emerging economies this year at 2.8 percent, a rate that could rise to 3.4 percent in 2013. In general, Moody’s said that risks to its global forecast were larger than foreseen in its previous report. Looking specifically at big emerging economies like those of China, India and Brazil, “the weaker external environment and decelerating domestic demand are causing a slowdown in growth momentum,” said Elena Duggar, Moody’s credit officer for sovereign risk. “We continue to expect that the slowdown in advanced economies and volatile capital flows will suppress growth in emerging markets,” she added.