Big emerging nations, sporting economic growth rates that run well ahead of the the major industrial countries, appear confident they can replace the downtrodden American consumer, an erstwhile major support for their export-oriented economies.
It’s part of a generalized and much notable confidence that emanated from participants in the annual meeting here of the World Economic Forum, ended Sunday, who hail from India, China and Brazil.
While it remains to be seen what growth will actually be achieved in 2010 by the “BIC” countries, especially if the Western recovery remains anemic and high unemployment remains a signature feature of the industrial world, little doubt was left here about the changed status under way as these three nations and others push for much more of a say in key global financial and political organizations.
Time and again, emerging market leaders speaking on panels favorably compared the fundamentals of their economies, including their lesser need to bail out domestic financial institutions, with the situations in the U.S. and other Western nations.
“It will be a bumpy road for the U.S. economic recovery this year and since the U.S. consumer is gone, we need to boost domestic consumption,” said Zhu Min, deputy governor of China’s central bank, the People’s Bank of China. He said China wants this year to see domestic consumption, already growing strongly, close in on the much higher growth rates of investment spending.
India’s growth rate has decelerated to about 7% annually from the previous 9% since the credit crisis and Western recession set in. To climb back toward 9% domestic investment will replace what previously would have been export revenue, said Montek S. Ahluwalia, deputy chairman of India’s planning commission. Much of that domestic investment would go for infrastructure.
Brazil forecasts GDP growth of 5.5% this year. Finance Minister Guido Mantega said a sub-par global recovery would hurt Brazil and other commodity exporters. Still, internal demand is growing 7% and investment spendiing growth is 15% to 20%. Global companies “trust our internal markets will continue to expand,” he said.
There’s a marked difference in mood between business optimism in much of Asia and gloom in the West, said Ahluwalia, a topic commented on by many here.
“We are happy with our role in the G20″ group of countries, which has largely supplanted the narrower G7 as the key global body dealing with economic issues, Mantega told Dow Jones Newswires. “We have been recognized as a player on the international scene.”
The architecture of the world’s economic and global organizations was formed right after World War II and didn’t take into account much of the world’s population, said Anand Sharma, India’s minister of commerce and industry. That is unacceptable, he stated.