It seemed it was time for revenge. Some countries considered up to the last decade "underdeveloped" finally managed to emerge and rise to a dominant position in the global economy. Instead, the BRICS countries (Brazil, Russia, India, China, South Africa) will have to wait a little longer. Their economies, heavily dependent on exports, have slowed down with the slowdown in the EU and the US. Beijing's GDP growth will not exceed 7,5% this year, when at the beginning of the year a +8,5% was estimated. In India, la political corruption and the slow bureaucracy are undermining investor confidence in the country. In Brazil we speak of a drop of more than 4 percentage points on the growth of 2012. The Russia, with theentry into the WTO, will have to implement extensive structural reforms which will weigh on the GDP. The South Africa Is that more connected to Europe and which is affected, most of all, by the debt crisis.
It also seems to have started a change in direction of financial flows which, from emerging countries, are returning to Old Europe. As the CEO of Intesa SanPaolo Enrico Cucchiani recalled a few days ago at the meeting of the International Monetary Fund (IMF), "the climate of confidence in Italy has improved” and investment funds “are buying Italian debt”. And there is no doubt that, if the two world giants, the USA and the EU, grow again, the BRICS will also benefit. The question is always how and when.
And yet, the weaknesses that these five countries have recently shown do not seem to frighten everyone in the same way. Jim O'Neill, creator of the acronomino BRICS, sees in Chinese slowdown a change to one "better quality" of growth compared to the excessive focus on quantity in recent years. Furthermore, in the last year, the BRICS have tried to find an agreement to create a own multilateral bank that would finance projects in their countries. Although Beijing had initially opposed the proposal launched by New Delhi, according to O'Neill "China could jump ship". Especially if the United States continues to refuse to give BRICS greater weight in the International Monetary Fund and the World Bank.
Just this possible increase in South-South investments and reciprocal exchanges between the BRICS is one of the signs that give hope for overcoming the more immediate problems, related to the European crisis. Furthermore, the governments of these emerging countries still have a ample room for macroeconomic maneuvers to stimulate the economy. As commodity prices fall, they could ease monetary policy and adopt expansionary fiscal policies, since their public debt is on average 30% of GDP.
Until now their economies are largely linked to those of Europe and the United States and, if they do not find alternative forms of development, it is inevitable that their fates will remain tied to the trend of Western countries. But the BRICS are trying to find an alternative way, a different development that starts from themselves. And at that point they could really get their revenge.
