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Fitch Ratings: Growth in BRIC cannot offset global slowdown

Fitch Ratings: Growth in BRIC cannot offset global slowdown

Emerging economies such as China and India are growing faster than the rest of the world but still lack the firepower to offset weaker growth in the U.S. and European Union, Fitch Ratings said yesterday.
The main emerging markets commonly known as BRIC - Brazil, Russia, India, and China - remain very dependent on exports to the industrialised economies with a combined trade surplus of US$500 billion, said James McCormack, head of sovereign ratings in Asia for Fitch.
"The trade flows do not support the emerging markets contributing to offset a recession in the U.S. and weakness elsewhere," McCormack said at a Fitch conference in Singapore.
Many economists say the United States, the world's largest economy, is effectively in recession.
Some analystts have seen the rapid economic expansion in India and China as reasons for optimism even if the U.S. and other advanced economies weaken.
But Fitch Ratings argues otherwise.
"They (BRIC economies) are running very large combined trade surpluses in the order of US$500 billion... so if there's weakness in the advanced economies, you are going to see weakness in the emerging markets," McCormack said.
"The trade flows are going the other way, so the conclusion that we reached is that strong growth in the emerging markets is not really going to help offset weakness in the advanced economies."
Both India and China still account for a relatively small portion of global imports which means their economies' influence on international growth is limited, the U.S. ratings agency said.
India only accounts for two percent of the world's gross domestic product, said McCormack. "So in some sense, it doesn't matter how fast India grows and it's not a very open economy," he added.


Updated : 2020-12-05 17:36 GMT+08:00