Leading world economies will struggle with weak growth until 2014 at least mainly because of strains in the European and US economies, credit agency Moody's warned on Monday, cutting its outlook for next year.
But growth in emerging economies is also likely to slow down, Moody's said in an update on global risks on Monday.
And this outlook could be threatened, possibly severely, if one or more of the downside risks such as unexpectedly deep recession in the eurozone, tough US budget action, or threats to oil supplies materialise.
Another threat to the outlook was "the potential for a hard landing in major emerging markets, including China, India and Brazil," Moody's said.
The revision of the outlook concerned the G20 (Group of 20) leading economies in the world.
In these countries "we expect only a gradual strengthening in growth over the coming two years," the agency said.
"Fiscal consolidation and volatility in financial markets will continue to weigh on business and consumer confidence, while heightened uncertainty hampers spending, hiring and investment decisions."
Moody's said it expected real growth of output in the 20 countries of about 1.3 percent in 2012 and 1.6 percent in 2013 and then 2.0 percent in 2014.
The figure for 2013 was about half a percentage point less than Moody's had estimated in August.
"We continue to expect the G-20 emerging economies to outpace other countries in the G20. But growth prospects for emerging economies have also moderated, reflecting the further deceleration in world trade and the lack of significant new impetus from domestic demand.
"Overall, we expect real GDP (gross domestic product) growth in these economies to be little over 5.0 percent in 2012, slightly weaker than our August forecast. We expect growth to pick up gradually to around 5.5 percent in 2013, and 5.75 percent in 2014," the report estimated.
Moody's said that these leading economies had continued to slow down in recent months, partly as a consequence of the global imbalances which had developed before and after the eruption of the financial crisis in 2007.
The term global imbalances refers to the accumulation of balance of payments and trade surpluses by some, mostly emerging, economies, and the rise of external and budget deficits in the United States and Europe.
So far the rebalancing had been "relatively muted" with "unsustainable imbalances eroding only gradually in several regions."
Slow progress in dealing with structural problems and "headwinds" which were slowing the growth of trade coupled with volatile flows of capital, had caused Moody's to revise its outlook downwards, the agency said.
"The risks to our forecasts remain skewed to the downside," Moody's warned.
[Image via Agence France-Presse]