Mixed prospects for Bric economies

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: How have the Bric economies withstood the global slowdown and what are the prospects of an early recovery? An answer to this question is difficult in the context of the continued uncertainty of global growth, as indicated by the fourth consequent revision of the global growth forecasts by the IMF over the last seven months since July 2008.

And all numbers point to a sharp worsening of the scenario in 2009 as compared to the previous year. While the four revisions for 2008 reduced the global growth by only 0.7 percentage points, from 4.1% in the July 2008 estimate, to 3.4% in the January 2009 estimate; the 2009 figures went down by 3.4 percentage points from 3.9% to 0.5% over the same period. The only reason for solace is that the IMF estimates that global growth will bounce back, albeit at a slower pace to 3% in 2010.

One favourable aspect that stands to benefit the Bric economies is that the slowdown is expected to dent the developed economies rather than the emerging and developing economies. GDP growth forecasts for advanced countries in 2008 have been revised down from 1.7% to 1.5% to 1.4% and now finally to 1%. In contrast, the impact of the global slowdown has been rather benign on developing economies where four consecutive forecasts have brought down growth from 6.9% in the first two to 6.6% in the third and finally down to 6.3% in the last. Thus, while the forecasts have revised down advanced country GDP growth in 2008 by 0.7 percentage points, that of developing countries has been pulled down by only 0.6 percentage points on a much higher base.

What is however surprising is that the impact of the slowdown in 2008 has been very divergent across the four Bric countries. While the 2008 slowdown dragged down growth in three countries, Brazil, the fourth, seemed to have successfully evaded the recession, with its global growth even picking up by 0.6 percentage points to 5.8% in 2008.

Among the Bric countries where growth decelerated in 2008 the least affected was China where growth has been revised down by just 0.1 percentage points to 9.6% over the four estimates.