In the past few decades the BRICS countries (Brazil, Russia, India, China and South Africa) have played a vital role in the world economy in terms of total production, investment capital destination and as potential consumer markets. BRICS economic growth and social inclusion policies have helped to stabilise the global economy, foster job creation, reduce poverty and combat inequality, thus contributing to the achievement of the Millennium Development Goals (MDGs).
The global economy has been showing signs of a recovery following the financial crisis. While it is likely that global gross domestic product (GDP) will increase, the pace of growth itself is uncertain. Additionally, the quality of growth is far from certain, with real economic data not showing significant improvement. Instead, the meagre growth achieved so far, especially in advanced economies, can be attributed to attempts at demand augmentation via a reduction in fiscal tightening as well as liquidity-boosting measures via extremely accommodative monetary policies.
Advanced economies’ central banks are struggling to mitigate deflationary trends and have not yet been able to commit to a definite timeline on withdrawing liquidity support. Although the active monetary policies have mitigated the immediate adverse effects of the crisis, and have had a positive impact on unemployment, they have not had a commensurate effect on investment growth. All of this points to a danger of secular stagnation – a permanently lower trend of growth.
With this prospect, the BRICS countries should come up with proactive policies that reinvigorate their domestic economies, establish stronger economic relationships among themselves and influence the international scenario. This will also help them to reduce to some extent their excessive dependence on exports to markets in developed countries.
