The BRICS (Brazil, Russia, India, China and late addition South Africa) countries were a dominant bloc of economic powerhouses not long ago. But, since 2012, many stumbles have been noted, including the recent Chinese growth rate slowdown, inflation and unrest in Brazil and Russia’s perceived corruption and near dictatorship under Vladimir Putin. Late last week brought more projections of instability in the business sectors of the remaining two BRICS nations.
A new study on India by the group Business Today-C fore found business confidence slumping to its lowest level in two-and-a-half years. Nearly half of the 500 CEOs and CFOs polled reported worsening conditions during the last quarter. And about 75% of businesses predicted the economy worsening in the coming quarter, with two-thirds predicting it would likely look overseas for investment opportunities soon.
Meanwhile, the Republic of South Africa was assailed again by Moody’s Investors Service. The ratings agency affirmed its Baa1 assessment of South Africa’s government debt ratings and maintained a negative ratings outlook. It explained the negative outlook by citing:
- “Continued sociopolitical pressures on the macroeconomic policy framework headed into next year's parliamentary election against a backdrop of slow growth; and
- The weakened outlook for the mining sector, which is the country's largest single employer and main source of foreign exchange earnings.”
Moody’s also notably raised the credit outlook for the United States’ Aaa rating on its deficit reduction measures and returning economic growth late last week. It had, like Standards & Poor’s, reduced the U.S. outlook last year but, unlike S&P, did not reduce the prestigious Aaa rating at the time.
-Brian Shappell, CBA, CICP, NACM staff writer