Over the last few years – well since the Credit Crunch began in 2007 – we have been heartened when we look at the world economy to see that other countries, particularly those collectively known as the BRICs, seem to have borne up pretty well with their economies continuing to expand at a healthy rate year-on-year.
Surely good news for the rest of us? If they are doing well there must be some kind of positive contagion plus it offers the markets some areas other than the stricken eurozone in which to promote their exports.
We were, thus, disheartened to learn that the Brazilian economy grew at its slowest pace for three years in 2012 according to official figures. The Brazilian Institute of Geography and Statistics reported that GDP grew by only 0.9% in the year. Very disappointing given that, at the start of the year, the government was predicting 4.5% growth. And Brazil is not the only member of the BRIC group to experience a slowdown: Russia, India and China are also discovering that GDP growth has slowed more than expected.
Mark Williams of Capital Economics makes a worrying comment: ‘Slower growth in the BRICs is likely to shave half a percentage point off global GDP growth over the next five years relative to the past decade’. He points out that the issue is consumer spending, which for years was the driver of growth, and this can no longer continue to increase at rapid rates.
Surely a concern for all.