*Davos-Klosters, Switzerland, 23 January 2014 – *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% 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 6% to 7% 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 licences worth US$ 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 6% this year, 7% in 2015 and 8% 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.