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
||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
"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 inevitable."
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 American countries.
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 big economies.
"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