Emerging economies to drive global recovery in 2010: Moody's

NEW DELHI: Emerging market economies having large domestic markets and ample savings will continue to power the global economic recovery in 2010, says Moody's.

The economic revival, which is gaining steam, is led by policy-driven domestic demand in the emerging economies of Asia and Latin America, according to Moody's Economy.com.

"For the first time in modern history, the developing world -- particularly China, India and Brazil -- has supplanted the US in leading the world out of recession," the agency said in a report today.

Moody's Economy.com is part of Moody's Analytics, which is engaged in economic research and analysis.

Noting that emerging economies with big domestic markets and ample savings would continue to be the main drivers of the global recovery, the report said investment in infrastructure would remain important in these markets.

"Governments and central banks around the world have spent more than USD 11 trillion to support the financial sector and about USD 6 trillion on fiscal stimulus programmes," it said.

The report noted that in the absence of these measures, private demand would have collapsed, and the resulting social and economic costs would have been even greater.

"However, costly fiscal stimulus measures and bank bailouts, combined with lower revenues, have rapidly eroded public finances, threatening longer-term fiscal sustainability in some countries," it added.