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Jeffrey Hutton is a Morningstar contributor.

Big emerging economies have so much fiscal heft and room to relax the cost of borrowing that they might, just might, trigger something we haven't seen in while - an upgrade in the world economic growth forecast.

Brazil, Russia, India and China (BRIC) have all lowered their borrowing rates or the amount of cash their banks need to have on hand to offset loans as the European debt woes sap consumer and business confidence.

"It's the emerging economies versus the developed world," says UBS head of investment strategy and consulting George Boubouras.

"The BRICs have the capacity to ease their interest rates and stimulate their economies. There is the potential for economic upgrades later in 2012."

This week, the International Monetary Fund (IMF) lowered its 2012 forecast for global growth from 4 per cent to 3.25 per cent, before recovering again next year. Earlier, the World Bank cut its growth forecast from 3.6 per cent to 2.5 per cent.

But Boubouras says those institutions are just playing catch up, making official what money managers and pension funds were thinking in October, when credit markets were shocked by Europe's mismanagement of its debt crisis.

UBS lowered its own growth forecast four times over the past 14 months, most recently in November to 2.7 per cent.

While European governments may still fumble the recovery, chances are they will set aside differences enough to avoid the fallout of bank failures and the unravelling of the euro because it would be too bleak to contemplate, Boubouras says.

"The worst of the credit crunch out of Europe is probably behind us," Boubouras says.

"Europe's financial ministers understand their brief enough. They know how cataclysmic the break-up of the euro would be."

Also this week, the Reserve Bank of India lowered its reserve ratio from 6 per cent to 5.5 per cent. That central bank also lowered its economic growth forecast for the year to March from 7.6 per cent late last year to 7 per cent.

Earlier this month, Brazil's central bank cut interest rates for a fourth time from 12.5 per cent late last year to 10.5 per cent, as the economy showed signs of stalling.

Russia last month unexpectedly reduced its benchmark rate. China in November cut the amount of cash that banks must set aside as reserves for the first time since 2008.

But, Europe remains at the core of this dismal state of affairs.

Deloitte Access Economics said this week that Europe was the key to global growth in 2012.