Economic reforms ‘would boost BRICS growth’

23 Jan 15
Structural economic reforms have the potential to boost the growth rates in BRICS countries, finance ministers, businessmen and academics from the group said at the World Economic Forum said yesterday.

By Judith Ugwumadu | 23 January 2015

Structural economic reforms have the potential to boost the growth rates in BRICS countries, finance ministers, businessmen and academics from the group said at the World Economic Forum said yesterday. 

The event in Davos heard that growth across the group – Brazil, Russia, India, China and South Africa – could increase across the countries over the next decade if reforms were implemented.

India’s finance minister Arun Jaitley said the country aimed to return to an 8% - 9% growth rate, up from a forecast 6.4% in 2015.

Last year’s change in government, which brought Narendra Modi to power, had led to clarity about the country’s economic plan and had changed the mindset both inside and outside the country, he added, and ‘the world is looking at India again’. Lower oil prices are helping India’s current account balance and bringing down inflation.

South Africa’s finance minister Nhlanhla Musa Nene told delegates the country was working to rebalance its economy while also maintaining strong social programmes.

Nene said the government was working to improve the efficiency of the public sector and to make the government more accountable, as well as creating a good environment for the private sector. Fiscal restraint is needed at present, but ‘we will continue to develop infrastructure and to protect the poor’, he added.

Examining the prospects of the BRICS as a whole, Carlos Ghosn, the Brazilian chief executive at carmaker Renault-Nissan Alliance, told participants the firm would continue to invest in the countries.

He emphasised that despite difficulties across the group, including economic pressures in Russia and China, all were still capable of strong growth. ‘We invest not for the next two or three years, but for the next 10 or 15 years,’ he said.   

Delegates also heard from Marcelo Côrtes Neri, Brazil’s minister of strategic affairs, who said the country was returning to the ‘middle path’ originally forged by former president Lula in 2003 of combining redistributive social programmes and market-friendly economic policy.

Alexei Kudrin, the dean of the school of liberal arts and sciences at Saint Petersburg State University, said Russia was had to learn to live with lower oil prices. These were forcing the country to make structural reforms and diversify its economy in a way that could benefit the country in the long term.

Justin Lin, a professor at the national school of development in Peking University, told delegates China had to lower its dependence on exports and grow domestic consumption and investment.

However, he said the government’s strong balance sheet and high private savings will help facilitate this transition. ‘I am confident that China will be able to maintain a 7% growth rate over the next five or even ten years. China will continue to be an engine of world growth.’

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