WASHINGTON POST Opinion: …In his prescient book “Breakout Nations: In Pursuit of the Next Economic Miracles,” Sharma does this for the BRIC bubble. He writes: “The perception that the growth game had suddenly become easy — that everyone could be a winner — is built on the unique results of the last decade, when virtually all emerging markets did grow together.”
In reality, the early 2000s were simply an old-fashioned boom. China’s rapid growth fueled demand for raw materials (oil, grains, minerals) that raised prices and enriched producers, including Brazil and Russia. Easy credit in the United States, Europe and Japan encouraged money flows into other developing countries, where interest rates and returns seemed higher. In 2007, the boom’s peak year, about 60 percent of the world’s 183 countries grew at 5 percent or better, notes Sharma. Only three countries (Fiji, Zimbabwe and the Republic of Congo) didn’t grow at all…
As opportunities for economic catch-up shrink, growth also subsides. Sharma thinks China’s average annual growth will fall to a range of 6 percent to 7 percent. He’s also skeptical of Brazil. Without the commodity boom, Brazilian growth may be mired at 2 percent to 3 percent. He thinks government spending (about 40 percent of the economy) is too high, and investment in roads and other infrastructure is too low… (more)
