KATHMANDU: The ultimate grouping of the fastest growing and most powerful economies, namely Brazil, Russia, India, China and South Africa or the BRICS, has the potential to sketch the future of world economy.
Despite the US and the Euro Zone being vital components, China is the dominator in manufactured goods, India in services and
Russia and Brazil in raw materials supplies. By working together, they can undoubtedly direct the global economy.
Estimated to comprise about 20 per cent of the world economy by the end of this year, the world’s biggest markets have been
contributing more as compared to the past decades as revealed by the survey conducted by International Monetary Fund (IMF). The BRICS issues, because of their economic weight and their contribution to the world, have now become so important that their economic evaluation cannot be denied. At point in time when the debt of the Euro Zone is accelerating and the stand of the US tumbling, how will these
nations lead the world?
BRICS’ significance to the world is also due to their share of foreign-exchanges reserves. Each of these nations holds the largest of reserves, which accounts for around 40 per cent of the world’s total and China alone is the largest accumulator of these reserves. These nations are also major exporters to the big economies worldwide. With consideration to their contribution to the global economy, any decline in the proportion of their world stock would leave the investors in total misery.
Besides the deteriorating crisis in the Euro Zone and the weak employment gains in the US, one of the largest economies — China — has faced the slowest growth rate in three years and also had its interest rate revised twice in less than a month. Russia’s export has significantly dropped this year and similar is the situation of Brazil. India is no more different with its GDP growth slowing down to 6.5 per cent and South Africa is yet to convince the world that it belongs to the elite group of emerging nations.
Let us face it, even though the IMF states, “The combined GDP in BRICS will rise to more than USD 14 trillion this year,” the BRICS economic slowdown has not yet stabilised. Moreover, Chinese Premier Wen Jiabao also stated the downward pressure on the economy to be still relatively large and the government still needs fine-tuning of policies to stabilise this slowdown.
So in the midst of this economic downturn, will BRICS add a supporting brick to the falling global economy?
(The author is assistant manager at the business development department of Mercantile Exchange Nepal. He can be contacted through