Asia Times Online examines the status of the BRIC countries (Brazil, Russia, India, China) and whether these four countries — seemingly the focus of every corporate realignment over the last decade — will offer the kind of sustainable, long-term growth that companies need to keep the global economy humming.
The author, Martin Hutchinson, is downright dyspeptic about Brazil and Russia, less so for India, and moderately optimistic about China.
Russia under a renewed Putin regime is Venezuela without the nice weather and with a more effectively aggressive foreign policy. Countries of the former Soviet Union should rightly fear Putin’s efforts to restore it. The domestic economy will be a swamp of inflation, expropriation and declining living standards. Oil output, no longer buoyed by major international investment and technology, will follow the same path of accelerating decline as has Venezuela’s.
The ADB’s estimate of 5.5% growth for China over the 2010-2030 period is probably on the high side. China’s trajectory is likely to be one of financial crisis followed by several years of very slow growth and adjustment, followed by a much healthier “catch-up” period. Both China and India probably have a healthy long-term future, but it is not quite as untroubled as current markets predict. For the West, the BRICs’ troubles will be something of a relief – their extraordinary growth in the last few years has caused huge stresses in Western economies that require time to adjust. The process of wage differential shrinkage between Western and emerging markets will continue (there are, after all many emerging markets beyond the BRICs, most of which have not yet enjoyed their fastest periods of growth) but maybe at a slightly slower pace.