The BRICS countries should not be counted out as dynamic forces in the global economy. Brazil, Russia, India, China and South Africa (the BRICS) have all been hit to varying degrees by fallout from the global financial crisis, but leaders responsible for economic management in these countries predict they will rebound over the next few years.
Concerns that China’s economy will run out of steam are unfounded, Liu Mingkang, Distinguished Fellow, Fung Global Institute, Hong Kong, said. Growth rates have come down 30 per cent over the past three years but the authorities are confident that the country will maintain its economic momentum on a more sustainable course at a rate of six to seven per cent through to 2020. China’s breakneck growth in the past came at significant environmental cost.
The new government’s focus is on three priorities: reducing overcapacity, notably in heavy industry; lowering borrowing by provincial governments and increasing transparency in the markets for their debt; and reducing China’s dependence on export markets by stimulating internal demand. “In the short term, tapering of quantitative easing will create huge volatility in capital flows,” Liu Mingkang said. “We will certainly be hit by this volatility but, hopefully, not shocked”.
Guido Mantega, Minister of Finance of Brazil, said the country will not return to its pre-crisis growth levels soon, but it is already consolidating the reforms introduced over the past decade that have raised the incomes of the poorest people in society. Efforts to promote private investment will also continue with licenses worth $250 billion about to go for auction. These cover railways, ports and airports, motorways and other infrastructure.
“India’s growth declined because of the adverse external environment and due to some decisions we took,” Palaniappan Chidambaram, Minister of Finance of India, said. He is confident, however, that the country will grow at six per cent this year, seven per cent in 2015 and eight per cent in 2016. Questioned about the role of the state in the Indian economy, he said: “New space in the economy is reserved substantially for the private sector but state enterprises cannot be dismantled overnight or simply wished away. As long as the public sector is competitive and run on commercial terms there is no reason to take state enterprises apart.”
South Africa has achieved a lot in the past two decades and is now headed towards what Pravin Gordhan, South Africa’s Minister of Finance, described as “the new normal”. He said: “The global financial crisis, which was not of our making, did huge damage. We now need to enhance the skills of our citizens and improve our infrastructure to take advantage of the opportunities ahead.”
Arkady Dvorkovich, Deputy Prime Minister of the Russian Federation, said the country’s slow rate of growth is partly due to the economic conditions of its main trading partners, Europe and the China. He added that internal constraints are the main impediments to progress. “The business environment is not good enough. There is too much red tape and bureaucracy, and insufficient support for SMEs and other enterprises that will provide the high-tech jobs of the future,” he said.
The Annual Meeting 2014 took place under the theme, The Reshaping of the World: Consequences for Society, Politics and Business. Participating this year were more than 2,500 leaders from nearly 100 countries, including 300 public figures, 1,500 business leaders and representatives from civil society, academia, the media and arts.