The Global Economy in Turbulent Times

CHAPTER 133 Acronym Anxiety: BRICS Are Stumbling¹

On April 20, 2013, I finished writing Chapter 132, “BRICS Can’t Run as a Herd,” concluding that “Each BRICS (Brazil, Russia, India, China, and South Africa) must now reform in its own special way. . . . Each BRICS has to regain and sustain its own growth path before they can be expected to work together effectively as a group, to maintain global prominence again.”

What a difference a year makes. The International Monetary Fund’s (IMF) October 2012 Outlook forecasted BRICS gross domestic product (GDP) for 2013 to rise by 5.0 percent (4.1 percent in 2012) against 1.5 percent by the advanced economies (AEs) (1.3 percent in 2012), yielding a gap of 3.5 percentage points.² Between 2000 and 2008, their growth averaged 8 percent, six percentage points above AEs. However, in January 2014, The IMF revised BRICS growth down to 3.5 percent for 2013, compared with 1.3 percent for AEs, with the gap narrowing to just over 2 percentage points, reflecting weakening BRICS economic expansion. Indeed, BRICS (ex-China) GDP expanded by only 2 percent in 2013 (same as in the United States); for 2014, it will expand within the same ballpark (2.2 to 2.5 percent) as AEs according to the IMF and the World Bank. Bear in mind that, collectively, BRICS GDP is close to 90 percent of the United States; they account for 43 percent of world population but much less than 30 percent of global GDP, with combined forex reserves at a whopping US$4.5 trillion. The ...