“Goldman Sachs economist Jim O’Neill famously coined the phrase “BRICs” in 2001 to describe the bloc of emerging markets — Brazil, Russia, India and China — whose growth was so explosive that their markets were on their way to eclipsing America’s.
In the December issue of Foreign Affairs, Ruchir Sharma, head of Morgan Stanley Investment Management’s emerging markets desk, argues that the miracle of the BRICs is over.
…the new normal in emerging markets will be much like the old normal of the 1950s and 1960s, when growth averaged around five percent and the race left many behind.
BRIC growth was a fluke, Sharma says, fueled by the waning of the wave of economic crises in the late-90s and subsequent “global flood of easy money.”
And now?
…there is a lot less foreign money flowing into emerging markets. The global economy is returning to its normal state of churn, with many laggards and just a few winners rising in unexpected places.
The main culprit is China, whose population “is simply too big and aging too quickly” to sustain its breakneck growth, he says. We can instead expect a “three-to-four percent slowdown” there….”
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