By Judith Ugwumadu | 19 May 2014
BRIC economies are failing to expand because of political unrest and structural challenges, the Centre for Economics and Business Research said yesterday as it cut its growth forecast for this year.
The CEBR said growth across the group – Brazil, Russia, India and China – is predicted to be 5.3% this year, down from the 6% it predicted in April. Slow growth is expected to affect Brazil, Russia and China specifically, while a slight improvement in India’s prospects is anticipated.
CEBR economist Katie Evans said: ‘The ongoing crisis in Ukraine and growing unease across Europe have significantly reduced Russia’s economic prospects – which are already weak thanks to ageing infrastructure and reliance on oil and gas.
‘We have cut our forecasts for the second time in a month, in light of the growing risk of economic sanctions which severely curtail activity in the country’s hydrocarbons industries.’
Regarding Brazil, the centre said that, although the FIFA World Cup was meant to be an opportunity for the country to celebrate, it will not be enough to overcome its severe economic challenges. As a result, CEBR researchers cut their economic growth forecast for Brazil this year from 2.2% to 1.7%.
Meanwhile in China, the CEBR said authorities appeared increasingly willing to tolerate slower economic growth. It added that growth would fail to hit the 7.5% target and forecasts expansion of 7.3% in 2014.
India still faces a longer march to reform its economy, the analysts said, but a relatively calm exchange rate should provide the economy with some respite this year, allowing gross domestic product growth to expand by 5.4% in 2014, up from 4.4% in 2013.
Douglas McWilliams, CEBR’s executive chair, observed: ‘Although the BRICs are expected to slow this year, advanced economies will take up the mantle of global economic growth.
‘We expect the world economy to expand by 3.1% – slightly less than our previous forecasts [of 3.2% in January], due to the crisis in Ukraine and consequent drag on the Russian economy, but still the strongest since 2010.’
