Such rates are relatively modest by their standards but stand out sharply as the US, Japan and Europe are all mired in deep recession as their economies struggle through the fallout from the global financial crisis.

Chinese and Indian demand has largely kept raw material prices afloat this year – a key plus for exporting countries such as Australia and Brazil – while also offering hope against the prevailing gloom.

The two countries “send out a positive message at a time when the trend is dark and this can help reassure the markets,” said Michel Fouquin, international affairs analyst in Paris.

But beyond this psychological comfort, China and India have only a marginal impact on the wider global economy because they are exporters with limited domestic demand – ultimately, they are relying on the developed world to recover first before they too can move ahead once more.

“There is no way that the world economy can get back on its feet again just through [the efforts of] the emerging giants,” said Eric Chaney, chief economist with Axa.

China and India may drive demand for raw materials and other inputs that they use in their own exports from Brazil, Australia and smaller Asian countries but that is not enough for recovery in the developed world.

“I’m much less convinced that either China or India can [provide] a significant boost to other economies,” said Eswar Prasad of Cornell University.

Source: AFP