Global Slowdown and the BRIC

A recent Wharton interview of Shiv Khemka, vice chairman of SUN Group, based in London, New Delhi and Moscow; Silas K.F. Chou, president and CEO of Novel Holdings, based in Hong Kong; and Odemiro Fonseca, founder of Viena Rio Restaurantes in Rio de Janeiro, highlighted the following impact of the Global Financial Crisis for the BRIC nations:

• In India, sectors such as Real Estate which are highly leveraged will be worst hit. The GDP growth will be between 6 and 7 percent. Domestic consumption is good so the country's magnitude of the hit will be lesser as compared to US and Europe
• Russia has large reserves which will keep it relatively shielded from the crisis, though the rate of growth will slow down due to fall in Oil prices. The sectors that will perform the best are Energy and Mining and the major push will come from commodities
• China had been trying ti reduce its dependence on export oriented growth and boost domestic consumption for many years now. The slowdown will provide the country an opportunity to slow the accelerated pace and curb inflation. The focus will be on boosting domestic consumption and income diversification
• Brazil too has a lot of reserves and the markets there had been correcting by more than 30% before the global economic crisis began. The banks have making credit availability tighter there and reducing the tenure of loans. The expected GDP growth is around 4%.

Largely, the BRIC nations would overall benefit from the slowdown and most has already taken measures to counter or contain such a situation, before the crisis actually began. The growth now on will be far more stable as it will be based on core income spectrum for the nation i.e. their individual strengths.