Skip to comments.US Conference Board fears BRICS miracle over as world faces decade-long slump
Posted on 11/14/2012 2:01:30 AM PST by Cronos
The US Conference Boards global economic outlook calls into question the "BRICs" miracle (Brazil, Russia, India, China), arguing that the low-hanging fruit from cheap labour and imported technology has already been picked.
Chinas double-digit expansion rates will soon be a romantic memory. Growth will fall to 6.9pc next year, then to 5.5pc from 2014-2018, and 3.7pc from 2019-2025 as the aging crisis hits and investment returns go into "rapid decline".
Growth in India - where the reform agenda has been "largely derailed" - will fall to 4.7pc to 2018, and then to 3.9pc. Brazil will slip to 3pc and then 2.7pc. Such growth rates will leave these countries stuck in the "middle income trap", dashing hopes for a quick jump into the affluent league.
.."As China, India, Brazil, and others mature from rapid, investment-intensive catch-up growth, the structural speed limits of their economies are likely to decline," said the Board.
..America has a younger age profile and should eke out 2.5pc to 3pc growth until 2018, and 2pc thereafter. It has a big "output gap" of 6pc of GDP to close before it hits any speed limit, so part of this is just the effect of elastic snapping back.
..The Conference Boards forecast is starkly at odds with a report by the OECD last week predicting that China would keep growing at 6.6pc until 2030, and India at 6.7pc -- propelling the two rising powers to global dominance.
(Excerpt) Read more at telegraph.co.uk ...
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Two erroneous assumptions in this report:
1. the low-hanging fruit from cheap labour and imported technology has already been picked.
Labor costs are relative and technology will continue making an impact on productivity, especially in economies that leverage capital investment (i.e. not America)
2. While the report does not analyze debt-dynamics...
Huge reason BRICS will continue growing.