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Euro zone crisis main threat to global economy: Moody's

Published on Aug 30, 2012 7:11 PM
A Moody's sign on the 7 World Trade Center tower is photographed in New York in this August 2, 2011, file photo. Ratings agency Moody's is set to announce downgrades of many of the world's biggest banks, banking industry sources said on June 21, 2012. -- PHOTO: REUTERS

PARIS (AFP) - The euro zone 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 per cent, a rate that could rise to 3.4 per cent in 2013.

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