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What Happened to the BRICS?
A few years ago the BRICS nations seemed ready to move into the first ranks of the world economy. Today the economies of Brazil, Russia, India, China and South Africa are having their problems. What happened to the BRICS? Radio Free Europe reports on BRICS woes.
Brazil, Russia, India, China, and South Africa — the BRICS — hope to move the world away from the U.S. dollar and Western-dominated financial institutions, which they say do not meet the needs of emerging economies.
But steep drops in recent weeks in the currencies of the five countries, which account for 40 percent of the world’s population and about one-fifth of global economic output, underscore how difficult it would be for any of them to take the dollar’s place.
The problems of the BRICS nations vary case by case but the global economic slowdown is a culprit for all of them. Russia is hurt by low oil prices, which help the others to greater or lesser degrees. Brazil is hurt by slowing demand for raw materials from China which in turn is seeing its economy slow down due to decreasing demand from Europe especially. What happened to the BRICS is a case by case story.
Russian Adventurism
In response to the Russian annexation of Crimea and support of separatists in Ukraine the USA and EU imposed economic sanctions on Russia. CNN Money writes about how badly sanctions have hurt Russia.
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What Happened to the BRICS?
1.
2. A few years ago the BRICS
nations seemed ready to move
into the first ranks of the world
economy.
3. Today the economies of Brazil,
Russia, India, China and South
Africa are having their problems.
4. Before We Continue…
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5. What happened to the BRICS?
Radio Free Europe reports
on BRICS woes.
6. Brazil, Russia, India, China, and
South Africa — the BRICS — hope
to move the world away from the
U.S. dollar and Western-
dominated financial institutions,
which they say do not meet the
needs of emerging economies.
7. But steep drops in recent weeks
in the currencies of the five
countries, which account for 40
percent of the world’s population
and about one-fifth of global
economic output, underscore
how difficult it would be for any
of them to take the dollar’s
place.
8. The problems of the BRICS nations
vary case by case but the global
economic slowdown is a culprit
for all of them.
9. Russia is hurt by low oil prices,
which help the others to greater
or lesser degrees.
10. Brazil is hurt by slowing demand
for raw materials from China
which in turn is seeing its
economy slow down due to
decreasing demand from Europe
especially.
17. Russia jacked up interest rates in
response, sold dollars and euros
to defend its currency, pumped
money into the banks and
slashed government spending.
18. The situation has stabilized this
year, although the ruble has
come under pressure again
recently, but the economy is
already deep in recession.
19. The IMF expects Russian GDP to
shrink by 3.4% this year, as falling
real wages, the higher cost of
borrowing and shattered
confidence hit domestic
demand.
20. And western sanctions, and
Russia’s retaliatory ban on imports
of food and agricultural products,
could be responsible for nearly
half that decline.
21. What happened to the BRICS in
the Russian case has partly to do
with Russian adventurism.
22. The other part is that oil prices
have fallen by more than half.
24. We asked if the signs of the
slowing Chinese economy are
temporary or permanent in our
article, Is This End of the Chinese
Economic Miracle?
25. The bosses of the managed
capitalism economy have often
seemed infallible as cheap labor
attracted foreign investment and
produced cheap and profitable
exports for decades.
26. However, we have often
compared China to Japan of the
1980’s when the Japanese
seemed ready to take over the
world.
27. A glut of hidden debt took down
the Japanese economy and sent
it into two decades of deflation.
28. If this is the death of the Chinese
economic miracle hidden debt
may be the culprit for China as it
was for Japan.
29. And economic slowdowns in
China hurt raw material suppliers
from South Africa to economy is
bringing on a corruption related
witch hunt that could bring down
the president.
34. Last year the World Bank
assessed that the Indian
economy had become the
world’s third largest in purchasing
power parity terms.
35. This year, the U.S. Department of
Agriculture estimated that in real
terms, the Indian economy-today
the eighth largest by this
measure-would become the
world’s third largest by 2030.
36. And this year, China’s growth has
slowed, making India now the
fastest-growing major economy,
while other BRICS like Brazil and
Russia have slowed, too.