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A Tale Of Two BRICs

posted 2 Sep 2013, 01:09 by Mpelembe Admin   [ updated 2 Sep 2013, 01:09 ]

 

Reuters Business  Report - This BRIC economy has spun into crisis mode.

This one slowing, but still moving along.

China seems to be holding up despite worries it was heading for a hard landing - and its slowest growth in more than a decade.

Official China PMI figures - a leading indicator - hit a 16-month high in August, boosted by a jump in new orders.

And a private survey more focused on small to mid-sized companies showed factory activity expanding for the first time in four months.

Overall the data shows the world's second largest economy stabilizing, and points to a tale of two BRICS for the massive emerging economies anchoring Asia.

Bank of Singapore's Richard Jerram:

 CHIEF ECONOMIST, BANK OF SINGAPORE, RICHARD JERRAM:

"So when China does offer you some safe haven properties in a world where there's a lot of pressure on emerging markets, and really quite hard to find anywhere that you feel is a safe haven in this environment."

In India - a very different picture emerging.

The most recent data showing economic growth sliding to a four-year low.

The country's currency dropping to its lowest level in eight years, slumping 20 percent since May alone.

 REUTERS REPORTER, TARA JOSEPH:

"India is among a handful of emerging markets - such as Brazil and Indonesia - hit abruptly by an expected halting of the U.S. Fed's massive stimulus program. It's pumped huge amounts of money into the world economy."

But the response in the world's largest democracy has been indecisive, with political wrangling hampering any emergency measures.

China - with its one party state is able to dictate policy decisively.

With huge reserves it can ramp up subsidies to maintain order.

It can also delay liberalizing its tightly controlled currency to keep money at home.

Some are holding out hope for India's new reform-minded central bank governor, due to start this week.

But given its rough and tumble politics, he'll struggle to steer this BRIC towards happier times.



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