Jim O’Neill urges LatAm to adjust to a post-Brics era
Renowned economist outlines his vision of an era after the rise of countries he called the BRICs (Brazil, Russia, India and China)
Jim O’Neill, the economist who coined the
'BRIC’ acronym, has called on Latin American
policymakers to take action to cope with a new era of slowing
Chinese growth, and rising US rates.
||Photo caption: Fe Ilya
Writing in the May/June
edition of LatinFinance, O’Neill says
even countries like Mexico – which investors hope will
benefit from the US recovery and higher wages in China
– will need to implement successful policies to
consolidate the gains of recent years.
"There are two big external forces facing global markets
today: US interest rates and China," writes
O’Neill, the former chairman of Goldman Sachs
Asset Management. "If the US recovery continues, or
accelerates, then a less accommodative US monetary policy is
But he says that China’s slowing growth
– a key part of his early 2000s theory of the growth
of the BRIC countries (Brazil, Russia, India and China)
– could have equally drastic consequences for Latin
In O’Neill’s view "the days of
China as a low value-added exporter growing at 10% and gobbling
up the world's commodities" are now over. "Those countries and
companies that were the winners as a result of that China will
not be the winners of tomorrow," he says.
"Countries like Mexico, which find themselves much more
competitive as a result of years of rising Chinese wages and
appreciating currency, will be winners of this new China.
Examples of likely losers - Brazil and Russia among them - are
not hard to find."
For a country to be a winner in the new era, the economist
says it "is not sufficient" to rely on a more competitive
export sector compared to China. "Mexico suffered for years
from a weak US economy and Chinese competition," says
"For Mexico to be a clear winner from the new reality, it
will need to successfully execute its broad economic reform
agenda, especially in the energy sector." O’Neill
says it is a similar story for the region’s other
"With the exception of Argentina and Venezuela, much of the
continent seems transformed compared to 20 or 30 years ago,
with great progress in Chile, Colombia, Peru, as well as
Brazil, despite its recent disappointment.
"But close to a decade of rising commodity prices made that
apparent success easier for many to achieve. It is now up to
these countries and their policymakers to turn the gains of
recent years into something more lasting - and in doing so, to
boost the welfare of their ambitious peoples."
the full article in LatinFinance
Beyond Brics, by Jim O'Neill