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BEIJING—Not too long ago, the Brics nations looked like they might be able to provide a powerful engine of growth for the global economy. Don’t count on it for 2013.
Brics refers to some of the stars of the emerging markets—Brazil, Russia, India, China and South Africa—which together represent 40% of the world’s population. But only one of the nations, China, has the economic heft to make a major difference internationally on its own, and it is just now starting to come out of a slowdown. The other four nations face a variety of economic challenges, ranging from inflation to inadequate foreign investment to labor unrest.
Since 2009, the leaders of the group have held four leaders summits. South Africa, which joined the group at the end of 2010, is hosting the fifth summit in Durban, South Africa, in March 2013. But tThe hope that the Brics countries would help one another through increased trade, investment and political support hasn’t panned out. Officials and analysts from Brics nations say they act as much as rivals as allies, and their lack of cohesion adds to their economic problems.
China complains that other Brics countries increasingly target it in anti-dumping suits. Brazil objects to Moscow’s restrictions on Brazilian agricultural imports. Russia is trying to turn itself into a major farm exporter, which is bound to heighten competition with Brazil. Slower growth in China and India pushes down commodity prices, which hurts South Africa and Russia.
“The Brics is not about the economy,” said Fyodor Lukyanov, an analyst who chairs an influential Kremlin foreign-policy advisory board. “The bloc sees itself as an alternative to the West, but not a confrontational one, like Iran.” On the economic front, Brics nations “have different, sometimes conflicting interests,” he said.
The Brics view themselves as an alternative to the Group of Seven industrial nations—U.S., Canada, France, Britain, Germany, Italy and Japan—politically and economically. But the economies of the Brics and the G-7 remain interlocked. When the U.S. financial crisis spread to Europe, it didn’t stop there. The Brics nations weakened because they lost big export markets and sources of financing and investment.
In 2009, China’s vast stimulus plan helped shore up commodity prices, which helped its Brics partners—for Russia on oil and gas, for Brazil or iron ore and agricultural goods; and for India and South Africa on minerals. But China itself slowed in 2012, as did the other four Brics nations, which all are expected to register slower growth for 2012 than they did the previous year, according to JP Morgan JPM +1.90% . The bank predicts all but Russia, whose growth rate is expected to slow further, will see modest improvements in 2013.
“These countries face so many domestic problems,” said Arvind Subramanian, a former IMF senior economist who is now at the Peterson Institute for International Economics in Washington. “The common dynamism they had is coming under question.”
For China, 2013 looks as if it will yield somewhat faster growth than 2012, when its economy is expected to show a 7.6% increase, according to JP Morgan, the slowest pace in more than a decade. China slowed because European and U.S. export markets shriveled, but also because the country’s leaders, wrestling with the legacy of the stimulus spending, imposed restrictions on real estate to deflate a housing bubble.
Now, feeling more confident that it has housing and banking problems under control, officials have been easing restrictions and approving more infrastructure projects. A number of analysts project China’s growth in 2013 should top 8%.
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