The rise of the BRICS at the expense of the developed world has been a dominant refrain in global economics, but there are signs that the pendulum has swung back to the West. The New York Times reports:
Just as economists have begun lowering their forecasts for China and many other developing economies, the American economy is bouncing back. Japan appears to have turned a corner and is ending almost two decades of grinding deflation. Economic data out of Europe on Wednesday provided the first solid indication that many countries in the euro zone may be escaping the clutches of recession. […]Jim O’Neill, the Goldman Sachs economist who coined the term BRIC more than a decade ago, thinks one of the new beneficiaries of the shift in the global economy is most likely to be the United States. “I find myself thinking the U.S. is going to be one of the biggest winners,” said Mr. O’Neill.
China’s rapid growth is coming back down to earth. India’s growth is being hamstrung by widespread corruption and inefficiency, and the Indian rupee is “one of the worst performing currencies in the world this year.” Brazil’s growth this year is expected to be roughly one third of what it was two years ago, as its economy struggles with falling iron and soybean prices. The commodity price bust is going to hit Russia hard as well. Moscow is already feeling the pressure from new sources of oil and gas that threaten its stranglehold on the European energy market.Meanwhile American industry is booming, thanks in no small part to cheap shale gas, and America’s exports to China are up while its imports and overall trade deficit are down. Europe’s economy is showing signs of recovery, though it still needs to make some serious structural reforms. Japan is on the mend, as Abe’s three arrows seem to be flying true.GDP growth in the BRICS is still predicted to outpace that of the US, Japan, and Europe over the next few years, and the developing world will continue to be an important driver of global economic growth. But the chattering classes who predicted the demise of the West are finding out how premature that prediction was.[BRICS leaders image courtesy of Blog do Planalto]