Credit Congress '12: BRICs View Suddenly Not So Sunny

In recent years, surrounded by a sea of sovereign and business sob stories about how poor economic conditions were, there was one beacon of hope and grows: the BRICs (Brazil, Russia, India, and China). But, as NACM Economist Chris Kuehl noted during his appearances this week at Credit Congress, things have changed – and not for the better – in the BRICS and that, even if the economic bloc is better off than most, it can't be assumed that are protected from problems. His observations include the following:


Brazil – The leadership of the nation, still in its first year in power, is not proving as business friendly and/or savvy at its predecessors. Preparations for the Olympics and World Cup hosting this decade, once thought to be a sure-fire money generator to put them on the map as an elite economy, now foreshadows the potential to be a money-suck. And, like in the past, it seems to be having problems keeping inflationary pressure threats under wraps.


Russia – Things haven't changed – and that's the problem. The international optimism that conditions would become more transparent and less corrupt in government,business and banking simply haven't come to fruition as Vladimir Putin has taken control again (though some would argue he never really was out of power in anything more than title).


India – India is starting to have significant problems with inflation. Additionally, its position as an outsourcing destination positioned it in a favorable place in recent years. However, demands for better salaries and the desire for people to move into a middle class mean Asian neighbors are not cutting into that source of international business power.


China – It seems laughable to call 7% or 8% growth a problem. But, given the size of the population, China needs to add milllions upon millions of jobs every year to keep up with the population needs. Additionally, unrest seems to be building as workers there are starting to want better compensation and are making noise about it as the nation continues to move into a balance between a dictatorship-style government and capitalism. Potential for inflation also looms large.


Again, the BRICs remain better off than most -- but the days when the four nations can be counted on to virtually carry the global economy may be be in the rearview mirror.


-Brian Shappell, CBA, NACM staff writer


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