Thursday, February 09, 2006

BRICks ground to dust...

From Financial Express:

-Just two years ago, Brazil was basking in the glow of 5 percent economic growth, convinced it had a rightful place in the elite group of emerging market giants known as BRIC.

But now doubts about Brazil's place in BRIC - for Brazil, Russia, India and China - abound. Lackluster, start-and-stop growth has returned, while the economies of China and India have surged ahead to expand about 10 percent a year...

...At the World Economic Forum in Davos last month, Brazilians complained of being snubbed by the global elite. Brazil and Russia seemingly fell out of BRIC to leave only "Chindia...

Serves to remind us that this India passion of global industries may yet be a stormy affair while the going is good. If we dont make the most of it now (and we are missing opportunities galore thanks to our fighting leftists), we are likely to be the Brazil of tomorrow.

...Inflation also tends to spike with growth much beyond 4 percent. A tax burden north of 35 percent of GDP restrains growth, while a debt load of some 1 trillion reais and a pension system that runs deficits of up to 5 percent of GDP hurt output and contribute to a high benchmark interest rate, now at 17.25 percent a year...

...Growth under Lula, who is likely to run for reelection this year, is forecast at an average 2.86 percent, even though he promised a "growth spectacle" early in his term.

That is better than the 2.34 percent that Fernando Henrique Cardoso, Lula's predecessor, averaged over eight years.

Still, it is well below what Lula promised voters and the 5 percent that analysts say Brazil needs to alleviate poverty afflicting a third of its citizens.

"Brazil can and could do better," World Bank President Paul Wolfowitz said in December...

If Brazil fails to pass reforms and improve education, it might fall out of BRIC forever and be stuck in another, less respected group called BIIC, said Gesner Oliveira, the anti-trust czar under President Cardoso.

That Portuguese acronym BIIC stands for bureaucracy, taxes, informal markets and corruption.

"The world is growing more and we've never had such a great opportunity to grow. Yet we are wasting it," he (Gesner Oliviera, the anti trust czar under Brazils previous president Cardozo) said.

1 comment:

hopefuldisposition said...

I work for Boeing in Seattle and I worried about the issue you just brought up for a couple of reasons:

a. My mom who is a govt. servant is retiring soon and the increase in pension is not going to match the inflation rate...

b. I want to come back to a growing India and I worry if this is a bubble about to burst in a couple of years....

You might find this interesting
http://www.chicagotribune.com/news/nationworld/chi-0602090079feb09,1,3035289.story?ctrack=1&cset=true

-Hopefuldisposition