The Brics have taken an unhappy turn - FT.com

By Gideon Rachman

©Ingram Pinn

Over the past three years, conventional wisdom divided the world’s major economies into two basic groups – the Brics and the sicks. The US and the EU were sick – struggling with high unemployment, low growth and frightening debts. By contrast the Brics (Brazil, Russia, India, China and, by some reckonings, South Africa) were much more dynamic. Investors, businessmen and western politicians made regular pilgrimages there, to gaze at the future.

But now something odd is happening. The Brics are in trouble. The nature of the problem in each nation is different. But there are also some broad difficulties that link them. First, for all the hopeful talk of “decoupling”, the Brics are all affected by weak western economies. Second, all five nations are finding that endemic corruption is eroding faith in their political systems, and imposing a tax on their economies.

Anyway, if the new marks of Bric status are a weakening economy and dysfunctional politics, South Africa merits its place in the group. The country’s mining industry is plagued by wildcat strikes and may well shed thousands of jobs over the coming year. Growth is likely to slip below 3 per cent – and the leadership (or lack of it) of President Jacob Zuma is causing deep anxiety.

There is no straight line that links unrest at South African platinum mines to troubles at Chinese electronics factories, via a power cut in India, a protest in Moscow and a corruption probe in Brazil. Yet there are broad themes that link the troubles of the Brics. First, declarations of “decoupling” from the west were premature. The EU remains collectively the largest economy in the world. Recession there and slow growth in the US inevitably affect the Brics.

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