Sunday, September 05, 2010

No need to BRIC it yet...

A year ago for some wee wee publication I wrote:

"more than a third of the world's population lives in... China, Brazil and India. Together with Russia... they have been called the „BRICs“ (Brazil, Russia, India, China) by many economists. The problem is that the world is not used to an economy which is built on the BRICs. People question whether the BRICs can continue growing without US and EU economic leadership."

(click the timestamp below for more; I haven't got this "read more" feature sorted yet. PS I've been considering matters economic in recent times, so this is something I might be adding to the content here, which sad to say I neglected)

I think we may be answering this question now, although perhaps the BRICs might need expanding to some wider acronym. I noticed today that Nigeria's economy is set to grow this year by 10%. Mmmm. They say demography is destiny and that's one reason for optimism for the world economy: whole cohorts of youngsters turning productive just as the world gets connected in ways hitherto unknown.

Liam Halligan has a typically good piece in the Telegraph where he lists a string of positive data about the world economy - note I underline the word world. We simply might find that despite our corrupt bankers, moribund populaces and monochrone political numpties, we can't avoid the boom caused by the babies of the last quarter century or so, buzzing as they are with new communications gear. Halligan feels it "noteworthy that the latest IATA monthly air-traffic report shows that worldwide air-freight – itself, a reliable predictor of overall world trade volumes, a kind of lead-lead-indicator – continued to expand strongly during July, as did premium air travel."

Indeed. Actions speak louder than words. However, it's not all good news.

Also a while back, in another wee publication, I wrote about the notion of "decoupling", where "it is possible for some areas to continue growing while others contract."

Then I hedged my bets, so to speak:

"Well, can it happen? Does it happen? The answer seems to be “sort of” or “more or less maybe”."

I really suspected it could and I think we could be seeing it right now. Just as Japan became the sick old man of the world economy without stopping growth elsewhere in the 1990's, so the debt overhang and inflationary "quantitative easing" (which sounds like it might involve a measured amount of laxative) might be setting up conditions where we stagnate and they inflate. Most of our miserable pols wouldn't see that as too bad- a better way to enhance convergence than actually, you know, doing something.

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