BRICS can build optimism

Despite their slower growth, emerging economies will remain the engines driving the global recovery and future development

Since the outbreak of the financial crisis in 2008, the pattern of the world economy has undergone great changes. According to the International Monetary Fund, the average global economic growth rate in 2011 was 4.2 percent. For developed countries it was only 2.2 percent, while the emerging economies reached up to 6.4 percent.

However, since the second half of 2011, signs have pointed to a global growth slowdown in many emerging economies. This trend has continued into 2012, with many people beginning to question the future ability of the BRICS countries - Brazil, Russia, India, China and South Africa - to be engines of global growth.

India's economy is currently slowing markedly. Its GDP growth has fallen to its lowest level in nearly three years, as a result of the reversal of international capital flows, diminishing demand in its export markets, and the volatility of the price of crude oil. India's economic downturn is also reflected in a higher fiscal deficit and higher current account deficit.

After more than a decade of adjustment and reform, Brazil's public finances have greatly improved, with the net national debt to gross domestic product ratio down from 60 percent in 2002 to 37 percent in 2011. The proportion of foreign currency debt in total public debt has also fallen from 40 percent to 4 percent. However, since the second half of 2011, due to the debt crisis in Europe, especially the woes of Spanish financial institutions, the growth rate of the Brazilian economy began to decline, and it has picked up only slightly this year.

Russia's growth was better than expected in the first half of 2012, mainly because its oil and gas export revenues increased substantially, due to higher prices in the international energy market in the first quarter. Russia offset a 20 percent increase in government spending during the election period, thus allowing the federal budget to remain balanced. But Russia has just joined the World Trade Organization, meaning Russian foreign trade and investment could undergo new structural changes.

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