Better financia l health helps BRIC nations fight crisis

Written by Press Trust of India | New Delhi | Updated: Jan 30 2010, 04:18am hrs
The Bric countries Brazil, Russia, India and Chinahave weathered the global financial shock in a better manner than the rest of the world because of their improved international financial positions, says the Deutsche Bank.

The Bric economies better external financial positions are reflected in their large official forex reserves. Their combined forex reserves exceed $3 trillionequivalent to one-third of the world total, says a note by the banks research arm. Of the $3 trillion, China accounts for the largest chunk$2.4 trillion.

China is already the worlds second largest net creditor, trailing only Japan, and in the course of the next two decades, it would replace Japan as the worlds largest net international creditor, the report adds. The much improved external position represents a very dramatic change compared with the situation in the 1990s and early 2000s when Brazil, India and Russia suffered major external debt and/or balance-of-payments crises due to very weak net international financial positions.

However, in spite of the large forex reserves, the total Bric gross external assets remain small compared to most advanced economies. The US international assets amount to $20 trillion. Germany and France both hold $6 trillion of international assets. By comparison, Chinas assets amount to $3 trillion and Russias to a mere $1 trillion. Brazil and India hold less than $0.5 trillion. Beside China, none of the Bric economies can claim international financial great power status yet, the Deutsche Bank report says. The other Brics will undoubtedly play a more important international financial role in the coming years, it adds.