Are the BRICs decoupling?

We have heard this de-coupling theme for quite a few years now. The theory is that high-growth emerging markets are becoming less reliant on the U.S. and therefore are immune to exogenous shocks from the U.S. The video from Russia Today TV below explores this topic.

I spoke to RT America for this segment and you can see a few clips from that interview. My basic message was that the baton of global economic growth is being passed from the U.S. to emerging markets like China, Brazil and India. But this is a decade or multi-decade long process. While some would have you believe the U.S. is washed up, the U.S. will remain a dominant power economically for some time to come. Combined with the U.S’s military, diplomatic, and cultural leadership, this makes the U.S. the world leader for the foreseeable future. 

As for de-coupling right now, there is indeed some decoupling as we seem to have developed a two-track economy with the emerging markets and a handful of developed economies doing rather well and the rest of the developed economies in slow growth mode. In a multi-year recovery this dichotomy will endure. However, in a U.S. double dip, that’s not going to happen. China, India, Brazil will certainly feel the effects of a US. slowdown.

The video on these themes runs about 7 minutes.

  1. Freitagfan says

    I’ll believe it if this is still being discussed in 3-4 years. The BRICs ship a lot of their goods to Europe and the US. They aren’t going to see such growth rates if their export growth is cut dramatically.

    1. Edward Harrison says

      100%. That is what we saw in 2008 and 2009. The reason that China was able to pull through well was their massive stimulus campaign. These markets don’t have enough internally generated consumption demand to withstand a slowdown across the developed economies.

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