There’s a couple of interesting pieces this week on overheating in the BRICs and other emerging economies, notably in Asia – that is overheating in the economic sense and overheating in the climate sense.
Given the relative ease with which the emerging economies largely avoided the impacts of the global economic crisis one could be forgiven for thinking they were invincible. Not quite so apparently.
According to a piece in this week’s Economist (here), Argentina, Brazil, India, Indonesia, Turkey, Hong Kong and Vietnam are the ‘sizzling seven’ in the Economists new ‘overheating index’ (based on inflation; GDP growth, unemployment, credit growth, real interest rates and current account balance).
And on medium term on climate change risks (here), the highest risks in China, India, Bangladesh, the Phillipines and Vietnam.
None of this is news to the Asian Development Bank’s Managing Director, Rajat Nag, who tried in Asia 2050, Realizing the Asian Century to shake complacency recently by flagging up the ‘middle income trap’ (countries grow quickly and then stagnate), rising inequality that could threatening the social fabric, resource scarcity and global warming as noted above.
And finally, the big one – a slow down in China – Roubini predicts it in the next two years (worth listening to as the guy who predicted the global economic crisis). This would just after China is projected to become the largest economy in the world.
With international attention understandably on Euro-zone risks at the moment, an emerging markets crisis is off-radar or is it? It shouldn’t be as those emerging economies account for more than 50% of global GDP and 80% of global real GDP growth over the last 5 years – so take that away and everyone will feel it as the house come down (again)?
