Emerging markets to the rescue?
Bloomberg reports that the latest prophecy from Jim O’Neill, the Goldman Sachs economist who coined the term "BRIC countries" (Brazil, Russia, India, and China), is that "the BRIC consumer is going to rescue the world." He believes that emerging economies are well-positioned to pick up the slack in consumer demand during this downturn, citing, for ...
Bloomberg reports that the latest prophecy from Jim O'Neill, the Goldman Sachs economist who coined the term "BRIC countries" (Brazil, Russia, India, and China), is that "the BRIC consumer is going to rescue the world." He believes that emerging economies are well-positioned to pick up the slack in consumer demand during this downturn, citing, for instance, the spending power of the Chinese consumer and recent economic stimulus measures by the Chinese government.
Bloomberg reports that the latest prophecy from Jim O’Neill, the Goldman Sachs economist who coined the term "BRIC countries" (Brazil, Russia, India, and China), is that "the BRIC consumer is going to rescue the world." He believes that emerging economies are well-positioned to pick up the slack in consumer demand during this downturn, citing, for instance, the spending power of the Chinese consumer and recent economic stimulus measures by the Chinese government.
This is a pretty bold thing to say. While it’s encouraging to see that Chinese retail sales were up 22 percent in October, we’ve yet to see how China’s economic slowdown will flow through to the wallets of Chinese consumer. As I discussed a few weeks ago, it doesn’t seem clear that China’s economic stimulus plan even seeks to boost consumer demand. Over in Russia, we don’t yet have a sense of how plummeting oil prices will affect economic growth as a whole, and, as a consequence, we don’t know how consumers will fare. The same uncertainty holds for consumers in Brazil and India, as investors have fled emerging markets for safe havens like the dollar and, in doing so, weakening those economies.
In the long run, the conventional wisdom may hold that two billion-plus people in China and India alone means more than four billion socks to sell, but consumer spending could grow more muted in those parts of the world too in coming months.
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