India China to contribute to half of global growth in 2012

Despite the slowdown of their economies China and India between them continue to contribute over half of the world's economic growth, according to a new report by an investment management and advisory services firm has claimed.

In its report titled, The Year of Living Divergently, BlackRock Investment Institute (BII) said in 2012 growth would be slow with the US facing headwinds, but still being able to achieve positive economic growth and Europe likely to be slipping into recession while avoiding more dire financial contagion.

Robert C Doll, chief equity strategist for Fundamental Equities at BlackRock, said growth would continue to be hit by the lingering effects of the global "credit bust", which would include deleveraging, partially offset by the forces of accommodative monetary policy in much of the world.

The report said, emerging market economic growth continued to be a critical part of global growth over both the short and long-term.

"China and India are especially important given both their size and growth rates. And while growth in both countries is likely to be slower in 2012 than it was in 2011, together these two countries will account for more than half of 2012 global growth," it said.

"We expect China will account for more than 40 per cent of global growth, with India and the US accounting for about 15 per cent each. Until recently, increasing inflation in emerging markets has caused policymakers to raise interest rates and / or reserve requirements in an attempt to slow inflation, with the effort of dampening growth. We expect that process will begin to reverse itself sometime in 2012," it further said.