Bric: trying to build a wall between the world crisis and their economies
The dependence from emerging economies on the developed world has never been so questioned before. In the middle – or the beginning? – of a crisis which crushed first world markets, the economy of countries like the members of Bric (Brazil, Russia, India and China) continue to grow, outperforming their developed peers.
“We are already seeing signs that point to an economic recovery by 2010,” said Brazilian Central Bank President Henrique Meirelles recently at an investment seminar. According to him, timely measures were taken to combat the crisis, such as building foreign reserves (which currently stand at $205 billion), increasing credit availability and cutting taxes to stimulate consumer demand.
The FTSE emerging markets index has risen 41.1 per cent since the start of the year and 60.8 per cent since the beginning of March. This compares with a rise for the FTSE All World developed markets index of 7.2 per cent since the start of the year and 31.4 per cent since the beginning of March.
In interview to the Financial Times, Jim O’Neill, chief economist at Goldman Sachs, said he expects China and India to grow strongly this year in defiance of recession in most rich nations. Mr O’Neill believes this was due to a continued growth in domestic consumption and to the consequent shift in the world economy.
“Contrary to widespread expectations, the chances of China showing growth of more than 8 per cent despite the world crisis are quite high, and the markets are signaling that India’s election results raise the possibility of more reforms there,” he said.
According to the Brazilian government, the economy of the country expanded 5.1% in 2008 but is likely to grow by only about 1% this year. For 2010, Meirelles predicted modest, but positive growth rates, although he didn’t provide a specific forecast.
To the other countries that compose Bric (Russia, India and China), there are predictions which estimate that China will grow 6 per cent this year, India 5.1 per cent and Russia will contract 6.4 per cent. Some economists have already started to talk about the Bic, rather than the Bric, countries.
— With information from Financial Times and The Washington Post.
