Brazil in recovery mode.

Brazil, the largest country in Latin America, both in terms of land area, and economy, seems to have switched on to a recovery mode. It is one of those countries tipped to become a regional super power in its own right, but whose progress has been interrupted by the global economic crisis.

The Brazilian President, Luiz Inacio Lula da Silva or more popularly called Lula, was optimistic about his country’s recovery, and is in favor of cutting the lending rate further from its current historical low of 8.75%. The Brazilian President based his optimistic pronouncement on the fact that industrial activity and employment levels in the second half of 2009 had gone up. Foreign capital continues to flow into Brazil’s markets. The stock market is bouyant. And the currency has been gaining through the year. No wonder Lula is in an aggressive mood.

However, in order to temper the gungho mood prevailing in Brazil, the President of its Central Bank, cautioned against “excessive euphoria”. Like elsewhere, a little positive news in the markets leading to euphoria, Brazil is no exception in the present circumstances.

Overall, it would appear that Brazil’s economy is in the recovery mode. And if the current trends are sustained, it may actually come out of recession neat and clean. Experts believe that Brazil’s economy should really start looking up in 2010. With a little fine tuning of the interest rate structure in consonance with the inflation rate, it must be possible to strike a happy combination of growth and caution.

On balance, it appears Brazil is on way to recovery, as the confidence of foreign investors would testify. Sustaining the present optimistic upturn is the challenge facing Brazil.

BRIC are raring to go-Part IV

This is the fourth and the concluding part of the article on the summit meeting of the BRIC group in Yekaterinburg, Russia.

 

Energy Security:  At par with food security is the issue of energy security, for the world and its population.   With the world’s resources distributed unevenly, more so oil, the issue has been a matter of much heartburning among the have-nots.  

 

This is definitely a major issue for deliberations at the BRIC summit.   It is not clear how far the group is likely to go to press for a fair and equitable energy regime, as Russia is a major oil producer, and may not like to disturb it’s own applecart.

 

Nuclear Non-proliferation:  This is one issue on which the Western nations have exposed themselves time and again, with a one-sided approach.   While retaining their own right to proliferation of deadly nuclear weapons, they have sought to restrict the right of other countries to develop nuclear energy even for peaceful purposes.   This duplicity has led to a dangerous situation, with come of the countries like India, Pakistan, Israel, North Korea, etc., secretly developing nuclear capabilities, whose consequences are difficult to predict.

 

How exactly the BRIC group is going to tackle this issue would be a matter of interest.

 

Climate change:  After steadfastly refusing to toe the international line on this subject, the U.S. Government, under the present administration, has at last acknowledged the importance of climate changes to the survival of the world.  

 

The problem with this issue is the selfishness of countries in protecting and promoting their own economic welfare at the cost of others.   The BRIC group has decided to tackle this issue at its June sixteenth meet.   A wise approach to this problem would have beneficial effects in the long term.

 

The Yekaterinburg summit of the BRIC group is a significant event that is likely to set the tone for the lesser developed and emerging economies playing a more prominent role in world affairs, especially on the economic front, and that is expected to bear fruit in the form of economic stability and progress.   If the group really gets their act together, the West may have a problem on their hands.

                 

                                                                                 Concluded.

 

 

                                                                                                                                                .Concluded

BRIC are raring to go-Part III

This is the third part of the article on the summit of the BRIC group in Yekaterinburg, Russia.

 

Reform of the global financial system:   The global financial system, all along, has been dominated by the Western powers, who have subverted the system for the benefit of their own countries.   The capitalist system has been projected and promoted as the only right system of economic and financial governance, for the whole world, regardless of the circumstances and the economic conditions prevailing in other parts of the world.

 

The present crisis has shown the hollowness of this claim and exposed the weaknesses of that system to such a painful extent, that even Western commentators are speculating on the possibility of the demise of capitalism.   This development has provided an opportunity to the second rung economic powers to showcase their own systems as an alternative to the present one.

 

The BRIC group would like to bring about reforms to the present financial system, by injecting into it, some of the elements of their own systems, to increase their own stake, and control of the global economic system.   Reducing the influence of the Western stakeholders in the global financial system is one of the major tasks that the emerging economies have set for themselves.

 

The official stand of the emerging economies is that, the world economic system is slanted to serve the interests of the Western world, and to concentrate the benefits of the system in the hands of the few countries that control the major portion of the world’s economic assets.   Of course, there are issues between these emerging economies that are not easy to resolve.   But they seem to have made a beginning towards addressing these issues, with the intention of capturing the economic space that the West is bound to vacate in the years to come.

 

Food Security:  Hunger has been a recurring theme in the lives of a vast swathe of humanity for long.   The poorer countries are accustomed to this phenomenon on account of their long exposure to it.   But the present crisis is impacting on the food security of the developed countries also, and is setting the stage for social unrest not seen in the past.  

 

The unsettling effect of insecurity on the food front is an issue no Government can ignore in the present age, with growing awareness of the general public of their various rights.   The BRIC group, especially India, has a vast constituency of hungry souls that is bound to pose a serious threat to the ruling elite.

 

It is a welcome development that the emerging economic powers are addressing this serious issue, whatever be their motivations.

 

                                                                                      To be concluded.

 

BRIC are raring to go-Part II

            This is the second part of the article on the summit of the BRIC, being held at Yekaterinburg, Russia. 

 

            Reserve Currencies:  One of the major concerns of the BRIC grouping is the idea of a new reserve currency that would have a stabilizing effect of the world’s currency and financial markets.   They would like the world to depend less upon the U.S. Dollar and increase the role of the International Monetary Fund, of course, with a more decisive role for them in the Fund management.   The idea is to strengthen the IMF by pumping in more funds to enable it play a more prominent role in world economic affairs. 

            Russia, in particular, is keen about promoting a supranational currency, and more importantly, with the Russian rouble playing the role of a world reserve currency.   This would give enormous clout to Russia, in international economic and financial affairs.   That again raises the question, as to whether China and other members of this grouping would like that. 

            G20 Policy:  This is another major area for discussion and debate by the group in their summit meeting.   The G20 nations had come up with an elaborate policy statement of intent at their recent summit to tackle the economic crisis and to literally save the world from going under.   The G20 had recently come out with a policy paper laying down its action plan that would touch upon all the important issues affecting the economic conditions of the major part of the world’s population. 

            How exactly this would be done, and what role each of the member countries would play, and the possible results of this exercise, are some of the issues the BRIC group is likely to discuss.          

             Basically the BRIC group is looking to increase its influence in world affairs, taking advantage of the current crisis, by providing what they claim is a better alternative to the present system of economic and financial management.

 

                                                                                          To be concluded.

 

BRIC are raring to go-Part I

The BRIC meet today, the sixteenth, at Yekaterinburg, in Russia.   To discuss how to capture the international economic space, by pushing aside America and its allies.

 

BRIC stands for the names of the four emerging economies, namely, Brazil, Russia, India, and China that are expected to play an increasingly important role in world economic affairs, in the near future.   This seems to fall in line with the prediction of Goldman Sachs, who coined the term in 2003, and predicted that these four countries would provide stiff competition to the Western economies, and may overtake them in the next fifty years.

 

The leaders of these four countries are likely to discuss and debate on the following important issues affecting the world, at present:

 

Responses to the global financial crisis:  The global financial crisis, a result, largely on account of the bank failures in the U.S. and the related developments, has badly shaken the international financial system.   The consequences of these failures have affected the world at large, interwoven as it is, through a complex web of financial and economic pacts and arrangements.   No country can remain an Island in the present age, and has to be concerned with the developing scenario of increasing economic hardship, unemployment, social unrest, etc.   

 

The present crisis has thrown up opportunities to the second level powers that have been waiting in the wings for long, to showcase their strengths, and to stake their rightful place in the world.  

 

Alternatives to the U.S. Dollar:  One of the most significant developments arising out of the present crisis is the serious thought being given to the utility of the American dollar, and the possibility of replacing it with an alternative currency, that would act as a stabilizing agent, a role played hitherto by the U.S. Dollar.   If it becomes a reality, it would indeed be a major victory for the second rung economic powers that could change the international financial landscape forever.

 

                                                                                         To be concluded.

 

 

BRIC to the fore.

Yekaterinburg.   An unusual name, one would not associate with an earth-shaking economic development.   But that is what it might turn out to be, if the BRIC nations had their way.   And the day is almost upon us.   The sixteenth of June.

It is on this day that the BRIC nations are scheduled to hold their first summit, to press for their claims for a prominent and a permanent place under the sun.   BRIC is the acronym for Brazil, Russia, India, and China, the four emerging economies that are expected to play a leading economic role in the years to come.

 

These four countries have been least affected by the economic crisis the world is going through.   Consequently they are contributing to the stability of the international economic system, whether to the liking or dislike of the Western world.   Willy nilly, the West has to accept the stabilizing role of these countries under the present circumstances, and hope that they themselves recover from the crisis, while the BRIC nations hold the fort.

 

With the economic crisis steadily chipping away at America’s strength, and its influence in world affairs, the emerging economies are having a field day, at the cost of the only superpower, and quite enjoying it!  

 

The BRIC summit is slated to discuss matters of substantative importance for the world at the moment, like the present global crisis, alternatives to the American dollar, a new reserve currency, the G20 policies, reform of the global financial system, food security, energy security, nuclear non-proliferation, and climate change.

 

It should be particularly galling to the Americans and their allies to get lessons on these subjects from their “subjects”.   But with China holding the largest share of U.S Treasuries, and the four nations accounting for roughly 15% of the global economic output, it would appear that these emerging economic powers are destined to play a prominent role in world affairs, economically, and in other ways, in the years to come.