Counterparties: The BRICs miracle may be ending
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The economic miracle of the BRICs, which are estimated to account for more than half of global growth in the last three years, could be coming to an end.
Today we learned that India’s economy grew at a rate of 5.3% in the first quarter, down from 9.2% over the same period last year and the slowest pace of expansion in nearly a decade. Walter Russell Mead sees the causes for the falloff as internal and self-inflicted: “Parliament is paralyzed, economic reforms stall before takeoff, and the government is plagued by corruption scandals”.
India is, of course, the vowel that anchors the BRICs, and expectations are high. As Sober Look highlights: “one could argue that 5% is still respectable when it comes to GDP growth. Not for India.” And certainly not for China, where there are not just concerns over the validity of economic data but also the fear that the economy may have been knocked off its 8% growth trajectory and into a recession. Chinese Premier Wen Jiabao has called for the government to increase its focus on “stabilizing growth”, but it’s uncertain whether or not that means stimulus is on the way.
And as the US economy continues its tepid recovery and European growth concerns intensify, Matt Yglesias is dire and direct on the potential effects of slowing growth in the BRICs: “This time around, if the rich countries can’t get our act together, the whole world will spiral into recession”. – Ben Walsh
On to today’s links:
Drudge Report financial headlines as contrary indicators – Bespoke Invest
What to make of the massive collapse of US interest rates – Business Insider
Tomorrow’s jobs report is even more crucial than normal – NYT
A new unit of media attention: The Kardashian – Ethan Zuckerman